State law requires that every motorist invest in liability coverage that will pay for the costs other people incur when an insured driver causes a crash.
Both property damage and injury-related expenses are eligible for insurance coverage, and people are often eager to have a check in their hands, especially if they cannot work after a crash. A settlement from an insurance company means receiving a lump-sum payment that can help someone catch up on their bills and cover household expenses until they return to work. But, before accepting a settlement, those affected by a crash need to understand the two facts below for their own protection.
Settlements end company liability
In theory, an insurance company may keep paying out on costs as they accrue for vehicle repair or injury-related losses until someone reaches the policy limit for the applicable coverage. However, a settlement will usually represent the end of a company’s obligation to a claimant. Even if someone has thousands of additional expenses after they cash their settlement check, the insurance company likely won’t cover those costs. That means that those negotiating a settlement need to have a realistic idea of the long-term costs related to their injuries.
Settlements may be impacted by insurance company misconduct
Lowball settlements are a common tactic intended to save the insurance company money. In some cases, a settlement could constitute bad faith insurance practices. It is against the law for insurance company to intentionally violate its own policy terms or to operate in a manner that deprives people of the coverage they require based on the specific policy. One of the only scenarios in which someone can seek more compensation after a settlement is when they can prove in court that the insurance company operated in bad faith by offering far less than the policy should pay or the crash would likely cost an individual.
For most people affected by a car crash, it is much more efficient to secure an appropriate settlement in the first place than it is to try to revise a settlement after agreeing to an inappropriately low amount of compensation. Recognizing the risks inherent in accepting an unreviewed a car crash settlement may help people demand financial justice after a collision in ways that are effective and informed.