What’s in Your Car Accident Settlement Agreement?

Overview of Car Accident Settlement Agreements

If you are involved in a car accident, you are legally entitled to seek compensation for any injuries, as well as the pain and suffering caused by the accident.

The settlement might come from the at-fault driver’s insurance company or your own, depending on who was at fault for the accident.

The insurance provider could offer you a settlement at any time after the car accident.

Insurance settlement agreements, also referred to as release agreements, are legally binding documents. Signing a release agreement and accepting a compensation check means you forfeit the right to seek any further compensation for your injuries and damages.

Receiving one of these insurance settlement agreements—especially if you are struggling financially—can be a tempting proposition. You might feel you will save yourself the time and cost of filing a lawsuit and retaining an attorney.

Bear the following pointers in mind:

1. Once you sign a release agreement, it becomes a legally binding document.

2. A release agreement is likely to be more beneficial to the insurance carrier than to you, the injured party.

Most insurers begin the process with a low initial settlement offer. If the company can obtain a signed agreement for this lowball offer before the claimant fully grasps the value of their claim, it saves a great deal of money.

Keep in mind that the initial offer you receive from an insurance company is rarely its final offer. Often, submitting a counteroffer can result in a more reasonable settlement, allowing you to avoid filing a lawsuit while still getting the compensation you deserve.

Get To Know Your Insurance Policy

Even if your settlement agreement is not dependent on your insurance policy, the policy can still affect the outcome.

You should determine whether your auto insurance covers the following:

• Deductible
• Rental vehicles
• Aftermarket upgrades (sound systems, oversize tires)
• Replacement value when the vehicle is totaled
• Verified pre-accident condition of your vehicle
• Bodily injuries and associated medical bills
• Lost income

A car accident settlement agreement is a formal document. The aim of this form, sometimes called a waiver or release, is to resolve the differences between the two parties. The document also releases the opposing party from liability. When this agreement is signed by both parties, it becomes legally enforceable.

Standard settlement agreements involve an insurance company compensating an injured party in exchange for the company being released from all subsequent liability stemming from the accident.

To ensure a settlement agreement is valid, include the following:

• Full details of the accident, including date and location
• Identities of all parties involved
• Claims: bodily injury, property damage, and noneconomic damages. Specify whether the form releases the opposing party from all claims or certain claims. Bodily injury and property damage are often detailed in separate agreement forms.
• Amount of payment in exchange for the release of claims

Itemize All Damages

List all damages you have sustained as a result of the accident, along with an approximate value for each.

If you want to replace items lost or damaged in the accident, find out whether the insurance company offers only depreciated value.

Keep all original receipts and bills. Make copies for the insurance company, and never surrender original documentation to the insurer.

Remember that you cannot collect for the same loss twice. You must either deduct the insurance company’s payment from your settlement or repay the insurer separately. This process is known as subrogation.

Think of Both Short-Term and Long-Term Costs

All the out-of-pocket expenses you face almost immediately after the accident are considered short-term costs.

Long-term costs of the accident usually arise from medically related conditions and effects that persist long after the accident.

If you have injuries requiring long-term medical care, rehabilitative therapy, or physical therapy, ask your healthcare provider for an estimate. Determine whether your insurance company will cover these expenses. If not, you should investigate working them into a final settlement.

Carefully Review the Document

The foundation of a car accident settlement agreement is a release of all further legal liability. You will promise not to sue the other party for the accident, and you will normally also agree to keep the settlement details private.

Agreements should include:

• Name of the at-fault party
• Your name, releasing the right to further action
• Date and location of the accident
• Money owed in exchange for the release
• How much time the insurance company has to release payment

Check that all personal information and contact details are accurate and complete.

Consult an Attorney Before Signing a Settlement Agreement

When you sign a car accident settlement agreement with an insurance company, it becomes a legal contract. You will be relinquishing any further right to legal action or compensation, so you should consult an experienced personal injury lawyer before signing a release in return for a check.