Being involved in a car accident can introduce difficult challenges into your life. Besides dealing with the pain and suffering of an injury, you also have to cope with the other disruptions and the financial consequences of an accident. This article provides information about how to handle the aftermath – from seconds after the accident to how to get compensation for your injuries and damages. It also discusses financial options like pre-settlement funding to help you handle the financial costs of the accident.
Immediately After the Accident
In the immediate aftermath of a vehicle accident, there are several preliminary actions you should take:
- Stop. If your vehicle is impacting other traffic and you can safely do so, try to move it to a safe location that does not interfere with traffic.
- Medical care. See if anyone needs medical treatment – including yourself. If medical care is needed, make it a priority of everything else discussed here and call for emergency services immediately.
- Contact police. Call the police, even if the accident appears minor.
Once everyone is safe, and law enforcement is notified, you need to collect information about the accident:
- Other driver. Get the name, address, and other contact information of any other drivers involved in the accident.
- Insurance. Ask the other drivers for their insurance company name and policy number.
- Involved vehicles. For each vehicle, note the make, model, and year. Also, try to get the vehicle registration number and license plate number.
- Accident details. Record the date and time the accident occurred, as well as its location. Other information needed includes the directions traveled of involved vehicles, weather and driving conditions, and an explanation of what happened.
- Witnesses. Ask any witnesses for their names and contact information. Also, try to get the name and badge number of any police officers on the scene.
- Photos and diagrams. Sketch a diagram of the final position of all vehicles involved in the accident. Take photos of the accident as soon as possible. Also, get pictures of the damaged vehicles.
Finally, and most importantly, stick to the facts. Don’t discuss fault with other parties or witnesses. Don’t admit fault.
Initial Contact with Your Insurance Company
Once everyone is safe, and you’ve collected the necessary information, it’s time to contact your insurance company. If you can safely do it from the site of the accident, that could be helpful because your insurance company may have additional questions for you or the police.
When talking to your insurance company, ask about the following:
- Deductible. This is the amount you’ll be required to pay before insurance covers the rest. For example, assume your deductible is $500, and the cost to repair the vehicle is $2,000. You’ll pay the first $500 while the insurance company pays the remaining $1,500.
- Transportation expenses. Depending on your coverage details, you may be eligible for reimbursement of transportation expenses, such as renting a car.
- Time limits. Make sure and understand any time limits that exist for submitting the claim.
Filing a Claim with Your Insurance Company
After you’ve had an initial discussion with your insurance company and settled down from being in an accident, it’s time to file a claim. How this is done varies on the state you live in and other circumstances.
Some states have a “no-fault” car insurance system. This means that, when you’re injured in an accident, your own insurance company will pay some, or perhaps all, of your damages, such as medical bills, lost wages, and property damage – regardless of who was at fault in the accident.
Insurance coverage in these states has personal injury protection (PIP). When you’re involved in a vehicle crash, you file a PIP claim with your insurance company. You do this even if you are at fault in the accident.
In states without no-fault insurance, you still file a claim with your insurance company if the accident is not your fault. Your insurer should cover bodily injuries and property damage.
However, if you were negligent, you’ll get limited help from your own insurance company and may have to deal with the other driver’s insurance company.
If you do file a claim after your initial conversation, your insurance company will likely identify a person to review the damage to your vehicle. This person is called an adjuster.
For vehicle damage, your insurance company may also ask you to get estimates from multiple repair shops. These businesses will send their repair quotes to the insurance company for their review. Then you can get your vehicle repaired or possibly replaced.
Negotiating with the Defendant’s Insurance Company
If you’ve sustained serious bodily injury or property damage at the hands of a negligent driver, and your insurance isn’t covering your costs, you may have to deal with the at-fault driver’s insurance company. This is called filing a third-party claim – with you being the third party.
To pay for third-party claims, the defendant’s insurance coverage includes liability insurance. There are two types:
- Bodily injury. This covers expenses related to your physical injuries.
- Property damage. This is for damage to your car and other property.
Liability insurance is often expressed as three numbers. For example, the coverage may be listed as:
The first two numbers relate to bodily injury. In the above example, the “50,000” refers to the maximum amount covered by the insurance for a single person involved in an accident, while the “100,000” is for maximum coverage per accident for everyone injured.
The third number, “25,000,” is the total property damage coverage.
Assume you and your daughter were involved in an accident. It was the other driver’s fault. You sustained $60,000 worth of bodily injury, your daughter $30,000, and your $45,000 Mercedes is totaled.
If you file a claim with the defendant’s insurance company, here are the maximum amounts available under the defendant’s coverage:
- $50,000 for your injuries. Since the limit in the liability insurance coverage is $50,000, you’d still be left with $10,000 in medical bills.
- $30,000 for your daughter’s injuries. This is less than the $50,000 per person limit and the total limit ($50,000 plus $30,000 is less than $100,000).
- $25,000 for car damage. This is the limit of coverage for your $45,000 Mercedes, so you’d be $20,000 short.
Now, the bad news is that these are the maximum limits. There’s no guarantee that the defendant’s insurance company will pay the maximum limits. Instead, it’s more likely that the insurer will contest liability, and even if they don’t, they will argue against the costs of medical treatment, lost wages, and the extent of your car damage.
So, generally, there are two disadvantages to filing a third-party claim with the other driver’s insurance company. One, the liability insurance policy limits may not cover the extent of your injuries or property damage, and two, if even the policy does, the insurer may be reluctant to pay the true value of your claim.
Sometimes, your insurance company or the defendant’s insurance company’s coverage is adequate, and they are willing to compensate you for your injuries and damages. Often, however, this is not possible, and you will have to engage in further settlement talks or sue the defendant.
All this takes time. Lawsuits, and even settlement negotiations, can take years to resolve. This can leave you in financial difficulty. For example, you may have to contend with the following costs before seeing a cent from the defendant or their insurance company:
- Medical bills for your injuries
- Prescription drugs
- Payments on the vehicle damaged or totaled in the accident
- Payment on a new car
- Losses due to being unable to work.
Fortunately, there may be financial help available to tide you over until you receive a settlement award or a favorable jury verdict. This help comes in the form of pre-settlement funding – sometimes called settlement advances, personal injury lawsuit advances, or lawsuit settlement funding. This pre-settlement funding allows you to get money now to pay for your accident-related or everyday, routine expenses. When you settle the case or the jury awards you damages, you pay back the original amount plus charges.
Filing a Lawsuit
Since filing a third-party claim may not provide adequate compensation, you may instead decide to sue the defendant driver. In most cases, the defendant’s insurer will provide legal defense for the defendant.
The Complaint and Damages Sought
The lawsuit is initiated by your lawyer filing a complaint. This document presents a plain statement of the facts and reasons that entitle you to recover damages. It also lists the damages sought from the defendant.
There are three types of damages typically awarded in personal injury lawsuits:
- Economic damages
- Non-economic damages
- Punitive damages.
Economic and non-economic damages are designed to compensate you for the costs of the accident and any accompanying pain and suffering. Punitive damages are intended to punish the defendant for their wrongful conduct and to deter others from acting in the same manner.
These are quantifiable and include the following:
- Past and future medical bills
- Lost income and diminished earning capacity
- Property damage
- Other expenses incurred as a result of the injury.
Past medical costs, lost income, and property damage are fairly straightforward to establish because documentation exists, such as medical bills, paystubs, and purchase receipts. Future medical costs and diminished earning capacity are more difficult to assess and generally require the expert assistance of medical professionals and economists.
Nevertheless, it’s critical to estimate these damages. Once you file a claim or go to court, and you’ve received payment of an insurance claim, negotiated a settlement, or received a jury verdict, you can’t go back for more.
Calculating Medical Expenses
Future medical expenses may be proven with evidence concerning:
- Necessary surgeries
- Lab tests like blood tests, X-rays, and MRIs
- Prescription medications
- Physical therapy
- Need for assistive devices like wheelchairs
- Assisted living
Appropriate expert witnesses help establish these expenses.
Calculating Diminished Earning Capacity
If you’ve suffered a severe injury, it may decrease your ability to earn a living. This can be complicated to prove because you have to consider possible raises, promotions, and other factors. For example:
- Age. Are you 24 with a successful career ahead of you, or are you 64 and almost ready for retirement?
- Industry. What’s the outlook of the industry you work in? Is it a declining industry, like brick-and-mortar book stores, or a promising one like app development or cloud computing?
- Promotions. Have you reached a plateau in your career? Or are you in a position with many promotional opportunities ahead?
All of this information contributes to the calculation of diminished earning capacity.
Estimating Property Damage
Damage to property is usually the difference in market value immediately prior to and right after the damage. If the property is destroyed, then its value generally is equal to its fair market value.
Like economic damages, non-economic damages also are intended to compensate you for the injuries you’ve suffered in an accident. Typically, non-economic damages include pain and suffering. Since there is no easy way to quantify this, it’s up to the jury’s conscience and common sense.
Like most people, members of the jury understand that pain comes with injury. However, to drive this home and demonstrate the pain and suffering endured to the jury, the following evidence may be presented:
- Medical bills
- Prescriptions for pain medication
- Testimony from family and friends.
These are all important, but probably the most significant evidence is the injured party’s testimony. There are other factors that a jury may consider when determining an award:
- Severity. Some injuries are accompanied by excruciating pain, like burns or severe back injuries.
- Recovery. How long does it take to recover from the injury? A few weeks, or is a lifetime of rehabilitation required?
- Medical expenses. There is usually a rough correlation between the amount of medical expenses and the jury award. More medical costs often result in greater damages.
The Insurance Multiplier
Getting a handle on how much compensation is appropriate for pain and suffering can be challenging. One tool for estimating these damages, often used by insurance companies, is called the insurance multiplier. While there are various formulas, one common method involves taking the economic damages and multiplying them by a number ranging from 1.5 and 5. How high the multiplier is depends on a number of factors, including the extent of the driver’s fault, the severity of the victim’s injuries, time for recovery from injuries, and how easy it is to prove them.
For example, let’s say that you get in a car accident. The other driver is clearly at fault. You suffer a back injury that requires several surgeries and takes years to recover. Economic damages are calculated to be $150,000.
Due to the circumstances, assume a multiplier of 4. The estimate for non-economic damages would be $150,000 x 4 = $600,000.
Note that this number is often used by insurance companies. Many plaintiff attorneys feel this estimate provides too low of a number, or they have extensive experience in personal injury cases and can draw from their own knowledge in estimating non-economic damages.
Punitive damages might be available if the defendant’s conduct was carried out in reckless disregard of your safety.
Both the plaintiff and the defendant need information to litigate a personal injury claim. Discovery is the formal process the parties use to share information with each other about their evidence and any witnesses they’ll present at settlement negotiations or trial.
There are several types of discovery, including:
- Requests for admission. This discovery method is available to save parties and the court time by preventing the unnecessary litigation of undisputed facts. One party requests another to admit that a fact is true. For example, in a case, it may be clear that the defendant ran a red light, but that the issue being litigated is the extent of the plaintiff’s injuries. The plaintiff may ask the defendant to admit that they ran the red light, so both parties can focus their time and effort on litigating the extent of the plaintiff’s injury.
- Interrogatories. These are lists of written questions, called interrogatories, that one party sends to the other. They are used early in the litigation and help establish basic information.
- Production of documents. Documents are often key to personal injury litigation. Examples include medical records, pay stubs, and photographs. A request for the production of documents allows a party to ask another person for relevant records. For example, the defendant’s attorney may request that the plaintiff’s employer provide the plaintiff’s pay stubs for the past three years.
- Inspection of land. In car accidents, the attorneys may wish to examine the site where the accident occurred. If the site is on private property (such a private road), the attorneys will request that the property owner give them permission to enter the property and examine the site.
- Physical and mental exams. Most discovery occurs between the parties without involving the court. However, due to medical privacy concerns, a party generally must seek court approval to request a physical or mental exam of a person.
- Depositions. These are verbal testimony under oath. The person being asked questions, the deponent, must answer a party’s questions. Depositions are useful because they require a person to answer questions without the aid of their attorney. Depositions are also necessary because sometimes a potential witness who is deposed ends up unavailable to testify at trial. This may occur if the deponent has passed away or is incarcerated. If this happens, then the deposition can be used as a substitute for the deponent’s witness testimony.
Any or all of these discovery methods are available to parties in a lawsuit.
Public policy favors resolving disputes without incurring the costs and time associated with litigation in court. It encourages the parties to resolve their differences before trial. Therefore, several types of settlement negotiations occur:
- Informal discussions
- Court-mandated settlement conferences
Parties may engage in any or all of these.
Typically, from before filing the complaint to literally minutes before a trial ends, the parties informally discuss settlement.
Court-Mandated Settlement Conferences
Most states mandate or encourage that the parties attend a settlement conference with the judge or appointed settlement attorney. The parties prepare briefs in which they outline their positions and summarize their demand for or defense against damages sought. Typically, the court will require a good faith effort, and if the parties fall short, the court may impose sanctions.
This type of alternative dispute resolution occurs where the parties discuss their disputes with a trained, impartial third party called the mediator, with the goal of reaching a settlement. The mediator works with all parties to try to achieve an agreement, and if successful, drafts a settlement agreement. The settlement agreement may or may not be binding on the parties. It’s initially up to the parties to decide, before the mediation occurs, whether the result will be binding.
Arbitration is a more formal process, and the decision of the arbitrator is often binding on the parties. Site visits and other exchanges of information may be involved, and the parties prepare detailed arbitration briefs. The process is similar to trials, with opening statements and presentation of the evidence. The result of a binding arbitration may be enforced in court and only appealed in limited circumstances.
If all pre-trial attempts, from insurance company claims to settlement discussions, fail to compensate you for your damages, trial becomes inevitable.
At trial, the parties select a jury. Then the attorneys for the plaintiff and defendant make opening statements. This is followed by the presentation of evidence. Then it’s time for closing arguments. Finally, the jury considers the facts, evidence, and the law and arrives at a verdict of liable or not liable. If liable, the jury will award the plaintiff damages.
A Long Road
When you’re involved in a car accident, there are many personal and financial consequences. You’ll be involved in reporting the accident, dealing with insurance companies, considering pre-settlement funding, and possibly suing the defendant. It’s a long road to recovery. When the end comes, you’ll have the satisfaction of having handled it appropriately and successfully.
Oasis provides pre-settlement funding, also known as consumer litigation funding, to its customers through different products depending on their state of residence or cause of action. Many consumers will be provided pre-settlement funding in the form of a purchase agreement, which assigns a portion of the pending proceeds from their legal claim. Other consumers, such as those in CO, IL, MO, SC, WI and some OK residents, will be offered a funding in the form of a pre-settlement loan, sometimes referred to as a lawsuit loan. These transactions have important differences, therefore, consumers should carefully review and be aware of the type of transaction that is offered to them by any funding company.