Personal Injury

The Role of Insurance in Settling a Personal Injury Claim

Reviewed by David Goguen, J.D., University of San Francisco School of Law
Here's a look at how insurance comes into play in an injury claim, and how it can affect the outcome.

If you're involved in a personal injury claim, it's a safe bet that insurance coverage will play a big part. The typical car accident scenario involves an exchange of insurance information between drivers, and ensuing claims are usually resolved in some manner between the claimant and the insurance adjuster whose company issued a policy to the at-fault driver.

Though perhaps to a lesser extent, other types of personal injury cases also hinge on the presence or absence of insurance coverage. In this article, we'll discuss how insurance comes into play in an injury claim, and how it can affect the outcome.

Is There Insurance Coverage for Your Personal Injury?

When you're deciding whether to file a personal injury claim, one of the first things to find out is whether the at-fault party has liability insurance that covers the underlying accident or incident. For example:

  • In a car accident case, does the driver who hit you have car insurance?
  • After a slip and fall, does the owner of the property have liability coverage that extends to injuries suffered by customers (commercial property) or visitors/guests (private property)?
  • If it's a dog bite case, oftentimes the dog owner's homeowner's insurance will apply to the incident.

In some personal injury cases, the other party has no insurance at all. Or perhaps the accident was caused by an unknown entity -- like a hit-and-run driver -- so there is no one to answer for the resulting injuries and other losses. In these situations, insurance can still play a role in settlement of the claim, but it will likely have to come from the injured person's own insurance policy (more on this below).

How the Amount of Coverage Affects an Injury Claim

How does the amount and type of insurance coverage affect a personal injury settlement? Let’s look at a typical car accident situation where one party is clearly at fault for the crash, and the other party is injured. In such a case, the liability coverage of the at-fault driver is the important consideration. Let’s explore some variations on this scenario.

If the accident is a low-impact crash and the injured driver suffered only soft tissue damage (such as whiplash-type injuries), the liability carrier is likely to give a low offer to settle the case. Why? Because the insurance adjuster knows that if the case goes to trial and a jury sees that the car has very little damage while the only claimed car accident injuries are difficult to show objectively (that is, no broken bones), then the members of the jury might be convinced that the plaintiff is not really hurt that badly.

But if the plaintiff is hurt severely and the other driver's liability coverage is at the state's minimum limit, then the case will probably settle very quickly. Why? Because the adjuster knows that even a modest jury verdict will exhaust the insurance coverage.

On the other hand, if there is significant liability coverage, then a personal injury case may be difficult to settle. In such a situation the adjuster has considerable funds to work with and wants to pay no more than necessary. That may mean a personal injury lawsuit needs to be filed before the adjuster has a sense of what the ultimate risk may be.

If You Need to Turn to Your Own Insurance Coverage

As noted earlier, in some cases the other party's liability coverage will be limited or non-existent. In these cases, it is important to understand what "first party" coverage you have. That can mean something as basic as health insurance, which will cover your medical bills after an accident. (Of course, health insurance won't cover other kinds of damages stemming from the accident, like lost income or "pain and suffering".)

In the context of a car accident case, "first party" coverage -- the insurance coverage of the injured party -- usually takes the form of "comprehensive" coverage or uninsured or underinsured motorist coverage.

In the case of an at-fault driver who has no insurance, if you file a claim under your "uninsured motorist" coverage (which is a type of coverage that must be offered to customers in most states, and is actually required in a few others), that claim will be negotiated by your own insurance company adjuster just as if it were an accident involving a third party.

In other cases, the at-fault driver may have liability insurance, but it may be insufficient to cover your medical bills and other losses. If you have adequate "underinsured" motorist coverage, it could make up some or all of the difference.

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