One of the most common questions any personal injury attorney receives from a client is whether the insurance company is offering a reasonable settlement for the case. Since every case is different, there’s unfortunately no “one size fits all” calculation to determine whether your settlement offer is reasonable or not. However, there are some common sense rules to look at when considering whether you have received a fair and reasonable settlement offer.
When you receive your settlement offer, consider your or your attorney’s answers to the following questions:
- Does the settlement offer reasonably compensate me for all of my “tangible” or “economic damages”? As discussed more in our post about “tangible damages”, any settlement offer should include compensation for past medical expenses, future medical expenses (if there are any), lost wages, and potential future lost earnings (if there are claims for these).
- Does the settlement offer reasonably compensate me for all of my “intangible” or “non-economic damages”? As discussed in our post about “intangible damages”, any settlement offer should also include compensation for pain and suffering, inconvenience, and/or mental anguish. There is a common misconception that people are compensated for their medical expenses (and other economic damages), and are then offered two to three times those expenses for these “intangible” damages like pain and suffering. Unfortunately, it’s not that easy. Some settlement offers may have more or less than this calculated amount, based on your location. Some settlement offers may not include “intangible” damages. One important thing to consider is that Missouri law currently prohibits an injured person from recovering these “non-economic damages” if that person was driving a car and did not have automobile insurance.
- Are there any liens that may affect my settlement? As discussed more in our sections about medical liens, medicare/medicaid liens, and ERISA subrogation, the settlement amount you get may be affected by other entities wanting reimbursement from your settlement proceeds. For instance, it’s possible that a large amount of settlement proceeds may be used to reimburse medical providers, medicare, or your own private health insurance company for medical treatment you received. It’s very important for you and your attorney to know what liens may affect your case.
- What is my attorney’s fee? What expenses does my case have? Your attorney should provide you with a copy of your fee agreement and explain how your case expenses are handled at the beginning of your case. When a settlement is offered, your attorney has a legal obligation to obtain your approval before the settlement is accepted. Your attorney should also provide you with a breakdown of attorney fees and expenses that will come out of your settlement, as well as a breakdown of any liens or other items that may affect your settlement amount before approval. You will also want to know what an estimate of expenses are if you file a lawsuit, and whether the attorney’s fee will increase if a lawsuit is filed.
- What happens next? A major consideration for any settlement offer is whether it is the final offer or whether further negotiation can take place. Sometimes insurance companies will offer a very low amount initially, knowing that they are going to negotiate some with you or your attorney. Some insurance companies encourage their adjusters to give the highest and final amount in the initial offer. If you can, ask for more. Always make sure you are getting every last dollar that belongs to you for your injuries. If you are confident that the offer is final and there is no room for negotiation, then you should talk with your attorney about whether a lawsuit is appropriate for your case or if it’s a smart idea to settle.
As you can see above, there are a number of things to ask and consider when you are offered a settlement. Every single case is different and there are no hard and fast rules about what your settlement offer will look like, or whether your settlement is reasonable.
Ultimately, it is up to you and your attorney (if you have one) to discuss what a reasonable amount is given the factors described above, as well as the chances of winning at trial if suit is filed. If you have any questions about your offer, please feel free to call our firm. We are glad to answer any questions you have.