Negotiating a Claim vs. Filing a Lawsuit

By Chris Dixon

If you or a family member have been in an accident, you may be wondering what the difference is between settling a claim and filing a lawsuit. Below, I’ll go into detail about the insurance claims process and touch on how filing a lawsuit actually works. As always, you can go ahead and contact the Dixon Injury Firm for more information or a free case evaluation.

Negotiating Insurance Claims

If you’re in a car accident, for example, the first thing you need to do is seek medical treatment. That’s a given. If you believe you have a claim on your hands, the next step is to file a claim with the other person’s insurance company since you have the right to file claims for compensation (medical, lost wages, etc.).

You would have to file a claim as soon as possible. Some insurers require it within 24 or 48 hours. This is the “Demand” stage, where you write out how the accident happened, why the at-fault driver is the insurer’s client, and what kind of compensation you require to make up for past/current and future expenses due to the accident. Most likely, the insurer you sent the claim to will send you back a Reservation of Rights (ROR) letter that acknowledges your demand but, most likely, they aren’t taking on the liability. They may accept your first offer or deny it. You can accept, reject, or counteroffer, in which case you’ll likely need a claims lawyer that specializes in your sort of accident.

What Is a Demand Letter?

Simply put, a demand letter should be professional and precise. One of the most common reasons an insurer will respond negatively is when you reach out negatively. It’s essential to not be nasty in these letters, and instead write them politely as possible. How would you feel if you received a letter demanding compensation for an accident that you probably didn’t know about?

Here are a few tips for forming a good demand letter from an insurance company:

  • Be polite, respectful, and professional. The insurer you’re claiming money from is more likely to respond in kind if you keep your cool.
  • Again, be professional. Type the letter in a document and edit it. Include all of your contact information, stay on point, and have a second pair of eyes look over it.
  • Provide a full, precise history of what led up to the event and what happened after the event. Your goal is to provide evidence that supports the claim.
  • If you’re angle is personal injury, a car accident, defamation, breach of contract, or whatever else it could be, state that in the letter and support it.
  • List your damages, in which “damages” means financial impact. This may include medical expenses, lost wages, pain and suffering, future rehabilitation, etc. Be specific.
  • State that your personal investigation is ongoing and that more evidence may be reported. (This is important that if something comes up later, you can refer to the original letter and say, “The original letter wasn’t my final investigation on this matter.”)
  • If there’s any evidence you believe the opposition has, such as a recorded phone call or pictures of an accident, ask if they can preserve it for future use.
  • It’s helpful to explain why it’s important to resolve the dispute. It saves money on litigation, avoids public knowledge, and everyone can move past the event.
  • Carefully explain liability, the defendant that is allegedly negligent, where the case would be tried, and any mitigating damages (i.e. you didn’t seek medical treatment and now your expenses are higher because of it).

A well-written demand letter is crucial to an insurance claim. You should send it by certified mail as soon as possible after the incident and even ask for a response deadline. It is also helpful to look into the statute of limitations in your state.

How to File a Lawsuit

The process for filing a lawsuit varies on the state, your situation, and how much progress you’ve made with the prospective defendant. The first step is to file a complaint with (usually) a local county court. Once a complaint is filed, you officially begin litigation. A complaint and a summons are served to the registered agent (defendant) by mail or by a process server.

Once this happens, the complaint should be answered within a specified window of time. The response will be filed to the court and acts as an answer to the plaintiff’s allegations. Next, both the plaintiff and defendant enter what is known as a “discovery” face, where they gather information about the case. There are admissions forms, interrogatories, production, etc. A claims laywer will be there to help you through the process.

If the insurer/defendant/guilty party fails to respond to discovery, or misses the deadlines, you may be able to motion to compel. This does not look good for the defendant, as a judge then orders them to reveal their discovery.

Most of the time, after discovery, lawsuits are settled in mediation. Taking care of settlements outside of court is often preferable given the defendant and the plaintiff don’t want any of the information to be public. If you want to know more about the legal process, read on in this FAQ or contact the Dixon Injury Firm. We specialize in personal injury, car and truck accidents, and other tort cases.

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