Costly Litigation Often Encourages Settlement In Car Accident Cases

By November 20, 2010 January 10th, 2018 Auto Accident Lawyer

Anyone that has ever been through a personal injury accident litigation process knows that most of the time there is a settlement negotiations phase before a lawsuit is even filed. In many cases, the insurance company that insures the defendant may even offer to settle when negligence (fault) isn’t even crystal clear. While not all cases garner a settlement offer from the insurance company, those that do are often based in large part on the cost to the insurance company if the case is actually litigated in a courtroom.

Personal injury law is a tort that-in theory-requires the plaintiff to prove that the defendant was negligent before the defendant is required to compensate the plaintiff. Sometimes negligence is clear but in many cases it is murky at best. Despite the fact that negligence is not always clear in all personal injury accident claims, insurance companies frequently offer to settle the claim and compensate the plaintiff anyway. The reason for this is simple – the financial cost of defending a claim in court is often much higher than accepting responsibility and settling out of court. Of course, if the insurance companies’ insured was clearly not negligent then they may have to litigate the claim in court.

Unlike the plaintiff’s attorney, the defendant’s (or insurance company) lawyer is not being paid on a contingency basis. The defendant’s attorney – or firm – is billing the insurance company for every hour they have to spend defending the personal injury accident claim. Those hours can add up fast. As a rule, when a personal injury accident claim is initially brought to the attention of the defendant, she will contact her insurance company. An adjuster will then review the claim. In most cases, the adjuster can make a decision whether to accept the claim and compensate the defendant without employing legal counsel or with just a brief review by the companies’ legal counsel. Once an actual lawsuit has been filed, however, an attorney must step in an respond. At that point, the clock starts ticking and the legal expenses start adding up. An insurance company can easily spent thousands-or even hundreds of thousands- of dollars defending a personal injury accident in court. Of course if they ultimately lose and are found negligent by the jury then they still have to actually compensate the plaintiff for her injuries as well. Sometimes the cost of litigating the lawsuit exceeds the amount of compensation the defendant is ordered to pay the plaintiff. Understandably, when a personal injury accident claim is not settled out of court and the plaintiff files an actual lawsuit, the insurance company will do everything possible at that point to defend the lawsuit. While it may have acquiesced on the issue of negligence for negotiation purposes, you can bet that once the costs of litigation start to add up it will deny negligence and defend its insured to avoid the additional expense of compensating the plaintiff at the end of the trial.

It is not surprising then that insurance companies frequently offer to settle personal injury claims prior to a lawsuit being filed. Financially, it is often the cost effective thing for them to do. If you have additional questions or concerns, please contact the California personal injury law firm of Ledger & Associates at 1-800-300-0001 or visit their website at