Settling a Personal Injury Claim

There are many benefits to settling a personal injury claim. However, claims should only be settled when it is the prudent thing to do, namely if there are no long term or permanent injuries. In order to effectively understand the settlement process, your accident attorney should be familiar with the laws and regulations that govern insurance companies.

When you first engage a personal injury attorney for an accident or injury, your attorney will consider, strategically, what is the best way to proceed on your claim. In many instances, the lawyer will simply attempt to settle the matter with a demand letter and some active negotiations.

This may be the most cost effective strategy that can be used. There are many benefits for you the client in this situation. If there is no permanent, serious injury, a demand letter can be successful without little added costs to you. The costs of preparing a demand letter are minimal. A case may be settled for the costs of medical records and investigation. If there is no permanent injury, this strategy may maximize the financial recovery for a lawyer’s clients.

Insurance Companies Have a Duty to Settle When Possible
Liability insurance policies in California generally require that the insurance company may settle any claim. As a matter of fact, the insurance company actually owes a duty to its insured to attempt to settle a claim in good faith. There is what is called an implied covenant of good faith and fair dealing in every contract, including insurance policies. Comunale v. Traders & General Ins. Co. (1958) 50 Cal. 2d 654. This covenant of good faith requires the insurer to accept reasonable settlement demands within policy limits in order to avoid exposing its insured to personal liability in excess of those limits. Comunale v. Traders & Gen. Ins. Co. (1958) 50 Cal. 2d 654, 659. The California Supreme Court has even written that “it is common knowledge that a large percentage of the claims covered by insurance are settled without litigation and that this is one of the usual methods by which the insured receives protection.” Id.

Once you are done with all necessary medical treatment, your accident attorney will prepare a demand letter for the insurance company. This demand letter almost serves as an outline for what is to come. Here, your attorney will form his or her various theories of liability, provide all relevant information on your injuries, describe your other tangible loses, e.g. loss of wages, and discuss the adverse ways the accident has effected your life.

Your personal injury attorney should be well-versed in your state’s personal injury law. Sometimes there are multiple theories that can be presented for one single injury. The insurance company will take all information provided and weigh it accordingly. Themore information you can provide your attorney with, the more ammunition he has to attempt to settle your matter.

Time Limits for Insurance company Responses
There are regulations from state to state that regulate how the insurance company must behave during this process. In California, there is California Fair Claims Settlement Practices Regulation. This regulation extends to all personal injury claims presented to the insurance, be it a motorcycle accident, pedestrian accident or slip and fall accident. The regulation states that "upon receiving proof of claim, every insurer…shall immediately, but in no event more than forty (40) calendar days later, accept or deny the claim, in whole or in part." If more time is needed to properly evaluate the claim, the insurance company must contact your attorney within those 40 days in writing. In their correspondence to your personal injury attorney, the insurance company must state why they need the extra time, such as if additional information is needed on your injuries.

The insurance company must then continue to update your attorney every thirty days. If they fail to do so, the insurance company is in violation of the above regulation and may be reported to the California Department of Insurance.

The insurance companies need to know who they are dealing with. Your lawyer should be aware of the above laws. If he is not, the insurance company may not take him or your injury claim seriously.