How Do Car Accident Settlements Work?

A car accident victim seated at a desk with crossed arms as they calculate their expenses.

There are times when, despite your best efforts, an insurance company just won’t make an offer large enough for you to cover everything you need. So what do you do?

When you finally get to this point, your best option might be to file a lawsuit, either against the insurance company or the at-fault party responsible for the accident.

Lawsuits follow a straightforward process:

  • File the lawsuit: Lawsuits officially begin when you pay the court a filing fee. You should also get a lawyer and build your case before going any further.
  • Serve the defendant: Notify the other party that a lawsuit has been filed. This allows them ample time to contact their legal counsel and prepare.
  • Negotiate a settlement agreement: You and the defendant will attempt to come to a fair agreement on how much they should pay you.
  • If no agreement is reached, take the case to trial: This begins with a pre-trial discovery, where both sides exchange information on the case. Settlement is still possible at any point before the trial.

Lawsuits rarely make it to trial, with an estimated ninety to ninety-five percent of all lawsuits filed in the US ending in an out-of-court settlement. This is because settlements offer both parties an opportunity to end on amicable terms that both sides see as fair.

Lawyers, in general, are also pretty good at gauging their odds of winning should a case go to trial and will prefer that their client does not suffer a loss where they risk getting nothing.

Who Pays for the Car Accident Lawsuit?

Who pays for an insurance claim is just about always clear: the insurance company. But the answer to that question becomes a little more complex when a claim is denied, and you have to escalate to a lawsuit just to get compensation for your injury.

Filing a lawsuit is often a far more expensive process than most people realize. You might only pay for a lawyer when negotiating with insurers, but filing a case means you pay filing fees, expert witness fees, and more depending on whether or not the case reaches trial.

And not all these costs are shouldered by the same person or party. Things can swing one way or the other per fee, per case.

Your lawyer can determine whether your potential gains from a lawsuit outweigh the expenses. If they do not, and if the costs involved will leave you worse off than a settlement, they will advise against it.

Attorney’s Fees

Like the rest of the country, Utah follows the American Rule when it comes to lawsuits and attorney’s fees. This means that by default, each party has to cover their own attorney’s fees, regardless of whether or not the lawsuit makes it to trial.

The American Rule is not all-encompassing, however, and there are exceptions. Most notably, courts can – to protect people from frivolous lawsuits – force one side to cover the other’s attorney’s fees if the plaintiff filed the case out of malice.

There are also cases where the losing party has to cover the other side’s legal expenses because a signed agreement compels them to. These kinds of contractual obligations, called attorney fee clauses, are fairly common across all states.

Finally, Utah state law has multiple statutes in place that can hold parties liable for attorney fees even without a contract. One such law is the Construction Trades Licensing Act, which specifically provides conditions under which a contractor is liable for attorney fees.

For the purpose of insurance claims taken to court, attorneys usually work for a contingency. This means your lawyer gets paid a percentage of your claim, so if you do not win the case, they do not get paid for their work.

Contingencies have the advantage of ensuring your lawyer works toward your interests as a client. By contrast, insurers usually pay lawyers an hourly rate, so they have a vested interest in getting through a case as quickly as possible.

One thing to keep in mind: even when the court rules for one side to pay the attorney’s fees, this is usually only up to an amount the presiding judge deems reasonable. What reasonable means, however, is the judge’s personal decision.

Compensatory Damages

Compensatory damages are awards given to accident victims to, as the name suggests, compensate them for any losses they suffered as a result of the accident. This includes all actual (economic or monetary) damages and non-economic damages (e.g., pain and suffering).

Specifically, this is how we refer to the amount of money the plaintiff and defendant settle on if they come to an agreement outside court. Assuming a lawsuit reaches the court, the defendant will usually only pay compensatory damages if they lose.

The money that covers compensatory damages usually comes from the defendant’s insurance company, up to the limits of their policy. If the policy is insufficient, the defendant will be ordered to shoulder the remaining amount.

Utah has a no-fault law that requires claimants to seek compensation from their own insurance providers, but it also has a comparative fault law when dealing with damages not covered by Personal Injury Protection.

This means that when filing a lawsuit, the plaintiff must not be more than 50% at fault for the accident, and the amount of payout is reduced by their percentage of fault.

So, if a defendant is found to be 80% at fault for an accident and the plaintiff 20%, then the plaintiff is only entitled to receive 80% of the agreed-upon amount of compensatory damages.

Punitive Damages

Unlike compensatory damages, punitive damages have the express purpose of punishing the wrongful actions of an individual. The idea behind punitive damages is that they should be a large enough amount to discourage similar acts in the future.

Let’s assume that an accident was caused by drunk driving, injuring a pedestrian. If the injured party files a lawsuit, the driver will likely face punitive damages on top of compensatory damages to warn them and other people against drunk driving.

Punitive damages are almost exclusively awarded in court. Utah law specifies that the first $50,000 in punitive damages is awarded to the injured party, and any amount in excess of $50,000 should be split between the injured party and the state.

Insurance companies rarely cover punitive damages for their clients, so the defendant usually has to shoulder them. That said, this is not always true, as coverage can vary depending on the policy.

Expert Witness Fees

Expert witnesses are some of the most valued voices in lawsuits. Even if an expert witness was not present at the scene of an accident, it is assumed that their knowledge regarding their niche subjects provides insight into the case.

Contrary to common belief, expert witnesses can be called even without a lawsuit reaching trial. They are usually called upon to review the details presented by both sides of the dispute to help both parties come to an agreement.

That said, expert witnesses are also some of the most expensive voices, with some receiving a stipend of several thousand dollars for a single appearance. This is because by reviewing the case, they are spending time practicing their field of expertise.

Parties can call multiple witnesses to collaborate on a case, further inflating costs. Each party is expected to pay for their own expert witnesses, and typically, personal injury lawyers will pay for their collaboration.

The exception to this is if a witness is called upon by the court (assuming you get to trial), in which case the court pays, though this might also fall under court costs. In addition, if you recommend a witness you personally know, some lawyers may have you pay for them yourself.

Other Fees

In addition to the above expenses, the state also outlines filing and court fees, which range from $35 to $375 based on the nature of the claim, and additional fees are added on top of this amount depending on petitions, orders, notices, and judgments filed.

Yes, that means filing the lawsuit itself costs money.

Courts pass these expenses to each party, who then typically pays for them in addition to the attorney’s fees. Rarely, agreements between lawyers and their clients may have these costs deducted from the attorney’s contingency if they win.

There is also a fee for the appearance of a civil jury, the members of which get a small stipend for participating in the trial.

There are instances when court costs are covered by the losing party in a court case, though there is always the option of requesting the judge for a hearing to reduce or disallow the costs.

When Your Settlement is Not Enough, Work With a Lawyer to Pursue Your Car Accident Lawsuit

When you feel the insurance company’s offer is unfair or when you need to seek additional compensation your policy cannot cover, a lawsuit might be the right choice to help you financially recover from a car accident.

Call Valley Law Accident and Injury Lawyers at 801-810-9999 today, or contact us via our online form by clicking on this link.

Our personal injury attorneys can assist you throughout the claims process. Should that not be enough, we will fight for you in your car accident lawsuit and help you get the settlement you deserve.

We do not charge for a case evaluation, and we can determine whether proceeding with a lawsuit is the right decision for you.

Get in touch

Work with the team that cares

5255 S 4015 W Suite 207C,
SLC, UT, 84129, United States.

Call 24/7 801-810-9999

Directions Sign
Valley Law Accident & Injury Lawyers Logo

Book a Consultation

Find out why so many clients appreciate the amount of work we put into their case.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
Brigham Richards
Receive top-tier legal guidance from a leading expert in the valley
Call to action

2021 and 2022 Gold Winner for Top Law Firm by Salt City Best


Call 24/7 801-810-9999