Imagine a scenario where you are driving down the road and a driver coming from the right fails to stop at a stop sign and broadsides your car. Under normal circumstances, the at-fault driver’s insurance company is going to fairly quickly determine that the other party was at fault and will probably contact the victim in an effort to settle all of the claims. Normally, once they determine that their insured was at fault, they will fairly quickly work to fix your car or total it out. During this time, the insurance adjuster will also likely make an offer to settle all claims, including your bodily injury claim. An injured party may be tempted to take them up on that offer. However, there are a number of pitfalls to doing so. Before considering accepting an offer for bodily injury or wage loss from the other driver’s insurance company, consult with an attorney. The following is just an example of some of the problems with settling too soon.
1. PIP coverage
PIP (Personal Injury Protection) coverage is designed to pay for medical expenses and wage loss even if another party was at fault. Some assume that they can simply take an offer from the other driver’s insurance company to settle their claim and then go get their medical care taken care of by their own insurance company. Unfortunately, it doesn’t always work out that way.
If the motor vehicle collision was caused by the fault of another and your insurance company is asked to make payments for your medical expenses and/or wage loss under the PIP provisions of your policy, they have a right to be reimbursed by the other driver’s insurance company under what’s referred to as subrogation. However, if you settle with the other driver’s insurance company, thereby releasing that insurance company and the at-fault driver from any further liability, you may be prejudicing the rights of your own insurance company to recover the payments that they have or will make. That may be grounds for your own insurance company to discontinue payment of your medical expenses.
Another potential pitfall, should you settle too early, is that you don’t know how long your treatment may go on for. Under Oregon law, your insurance company is only obligated to pay for your reasonable and necessary medical expenses during the first year following the motor vehicle collision, up to $15,000 in treatment expenses. What happens if your treatment goes beyond the one year your insurance company will pay or if your treatment expenses exceed $15,000? If you have already settled with the other driver and their insurance company, you will be responsible for those medical bills.
2. Medically stationary?
In our opinion, settling too early can create problems in terms of uncertainty as to your injuries. Generally, you should not attempt to settle your claim until you are fully recovered or your doctors have declared you medically stationary (such as a situation where you have plateaued in your recovery). Until you are medically stationary, you do not know the full extent of your injuries. If you attempt to settle too early and, then discover another ailment or injury, you will have no recourse. Once you have settled your claim, even if you discover a more serious injury or discover that more extensive treatment will be required, you do not have the ability to go back and undo that settlement.
3. Underinsured motorist coverage
Sometimes, if the accident is severe enough or your injuries appear to dictate it, the other driver’s insurance company will fairly quickly offer to pay you their policy limits. Every policy has a cap on how much the insurance company is required to pay. This cap is determined by how much insurance the insured pays for. In Oregon, the minimum limits that one can carry on a motor vehicle are $25,000. There are circumstances under which the other driver’s insurance company may offer you that $25,000 fairly quickly. It would be a mistake to take that money without consulting a lawyer and determining what your rights are.
What if your injuries are greater than you initially think or will be longer lasting than you and your doctors initially believe? You may have the ability to get additional money from your own insurance company under your underinsured motorist coverage. However, if you take the policy limits from the other driver’s insurance company without consulting with your insurance company and receiving their consent, you will likely prejudice your right to get additional money from your insurance company. Under Oregon law, if the other driver and his/her insurance company offers you their policy limits, you cannot take them without first consulting with your insurance company and receiving their written consent. Doing so will negate any potential underinsured motorist claim you may have against your own insurance company.
4. Same insurance company
In this age of corporate takeovers and consolidation, it is not uncommon to encounter a situation where both you and the other driver are insured by the same insurance company. It is also true that insurance companies tend to saturate particular markets with advertising and, consequently, you may find that both you and the other driver have the same insurance company. Do not be lulled into a false sense of security simply because you have the same insurance company as the other driver. The other driver’s insurance is not your insurance and they are not working on your behalf. Their fiduciary duty is to their own insured. Their interest is in settling your claim as quickly and cheaply as possible. Just because you happen to pay premiums to the same insurance company does not mean that they are looking out for you.
5. Time is money.
Insurance companies are incentivized to settle claims quickly. They want to settle with you before you know the full extent of your injuries. They want to settle with you before you incur medical expenses they might be ultimately responsible to pay. Other than the statute of limitations (the time limitation that you have to pursue your claim) you should not be in any hurry to settle with the insurance company. Take time to determine the extent of your injuries, consult with your doctors, and get the treatment you need to get better. The only side that benefits from a quick settlement is the insurance company.
Why should you hire an attorney? The answer is not so simple. However, negotiating on your own you have much less leverage than negotiating through an attorney. The insurance companies know that, without an attorney, you don’t have any other options than to take their top and best offer. When you have an attorney, the insurance company knows that you have other options. If we are unable to negotiate a settlement that is acceptable to you, we have the ability to take the claim to the next step by filing a lawsuit against the at-fault driver.
In summary, some people are able to negotiate a settlement on their own. Some people are best served by negotiating a settlement on their own. Some people, unfortunately, can only receive true and fair compensation with the assistance of a qualified attorney. You will not know all of your rights until you have consulted with someone knowledgeable on these issues. Our firm works on a contingency fee. We are only paid for our time and services if we recover money for you. There is no charge to you to consult with us.