Personal Injury

Personal Injury Insurance Claims Versus Personal Injury Lawsuits

Reviewed by David Goguen, J.D., University of San Francisco School of Law
After an accident or injury, you could get a quick insurance settlement, or you might need to take your personal injury case to court.

Very few personal injury claims go to trial -- less than 5% by some estimates. So what happens to the rest? The vast majority reach some form of personal injury settlement before trial -- sometimes before a lawsuit is even filed -- but some cases are essentially over before they can really get started. Let's look at some differences between court-based personal injury cases (lawsuits) and injury-related insurance claims, and what to consider when evaluating your claim and your options.

What Is an Injury-Related Insurance Claim?

It could be said that there are as many types of personal injury claims as there are types of accidents. And when an injury does occur, in many instances insurance coverage -- whether that of the injured person or of the person responsible for the accident -- will apply to the situation. And with those cases, there's a decent chance that the injured person's medical bills and other losses stemming from the accident will be fully paid for out of that coverage, up to the dollar limits of the policy.

In many instances, an injury-related insurance claim can be made and be resolved via an agreed-upon settlement without a lawsuit ever getting filed. In other words, many more injury-related insurance claims are filed compared with actual court-based personal injury cases (lawsuits). Speaking of which...

What Is a Personal Injury Lawsuit?

A personal injury lawsuit starts when the injured person (now the "plaintiff") files an initial complaint (a document stating the plaintiff's case) and summons (a document that notifies the "defendant" that they are being sued) with the local branch of their state's civil court. These documents are "served" on the defendant, who has a certain number of days to respond.

(Learn more about the personal injury complaint and how to file a personal injury lawsuit.)

If the lawsuit does not reach settlement at any point (keep in mind that settlement can occur at any stage), then the case will reach trial, and a jury will decide whether the defendant is responsible for the plaintiff's accident, and if so, how much to award the plaintiff (compensation awarded to the plaintiff is called "damages" in legalese).

But from the injured person's perspective, it is important to note that, in many cases, mediation and possibly arbitration are available. In many situations, these procedures are required by court order, contractual terms, or other legal provisions.

Do You Have a Strong Personal Injury Case?

Now we're at the crossroads between personal injury claims and personal injury litigation.

If you think you have a personal injury claim, you should know that personal injury attorneys typically evaluate claims based upon very practical criteria. First, the attorney will look at liability. Did someone else cause the accident? How clear is it that the other party was negligent in connection with what happened? Such issues can be hotly contested. And in some states, it can be seriously problematic if the plaintiff shares part of the blame.

Just as important will be the existence (or absence) of liability insurance, or failing that, available assets to satisfy a judgment. If the at-fault party has no resources to pay a judgment, then even the best personal injury claim is unlikely to succeed (more on this in the next section).

Looking a little closer, there are other distinctions worth noting. For example, the easiest cases to settle are often those where coverage is limited, since liability coverage limits will likely be paid out in any event. These cases should settle very quickly.

In cases where coverage is limited, some liability carriers will offer a settlement that is somewhat short of payout of the full insurance limits. The reasoning here is rather simple. The insurer figures that the injured person’s costs of pursuing litigation will add up to a certain amount. Knowing this, the carrier will offer the liability limits, less those presumed costs.

What Is an "Untenable" Personal Injury Claim?

Some personal injury claims are simply untenable from a legal or practical perspective, meaning it doesn't make sense to pursue them, either for the injured party or a lawyer. Typically these cases fall into one of two categories:

  • there are serious questions as to liability (it's not possible to prove that the other party is actually at fault for the underlying accident), or
  • there is no hope to collect a judgment or otherwise recover damages.

For example, if you're hit by an uninsured driver who has no assets, any lawsuit would likely be fruitless since it would be very difficult to satisfy a judgement against the at-fault driver.

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