Should I Settle for Policy Limits

or File a Lawsuit Against the Other Driver?

Published: January 26, 2021

Being involved in a car accident is overwhelming enough without having to navigate the complexities of insurance claims and lawsuits. One of the most challenging decisions victims face is whether to settle for the at-fault driver’s policy limits or file a lawsuit against them. While the answer depends on your unique circumstances, understanding the key factors can help you make an informed decision.

What Are Policy Limits?

In California, drivers are required to carry insurance with minimum coverage limits known as a 15/30 policy:

$15,000 per person: The maximum amount the insurance will pay for one injured individual.
$30,000 per accident: The maximum total amount the insurance will pay for all injuries in the accident, regardless of the number of victims.

For example, if the at-fault driver has a 15/30 policy and causes an accident, the most you can recover from their insurance is $15,000 per injured person or $30,000 total for everyone involved. This means that if your medical bills and pain and suffering exceed these limits, you’ll only recover the policy maximum unless additional action is taken.

What Does Filing a Lawsuit Involve?

When your damages exceed the at-fault driver’s policy limits, you have the right to file a lawsuit to seek additional compensation. For instance, if your medical expenses total $50,000 and you’re seeking $100,000 for pain and suffering, but the at-fault driver’s 15/30 policy only covers $15,000, you may choose to pursue a lawsuit for the remaining $135,000.

However, filing a lawsuit involves several considerations, including the time, effort, and potential costs of litigation.

Key Factors to Consider: Settling vs. Filing a Lawsuit

Medical Expenses
Assess your current and future medical bills. If they far exceed the policy limits, a lawsuit may be worth considering.
Pain and Suffering
This intangible yet significant damage often goes beyond what insurance policies cover.
Lost Wages
If the accident has impacted your ability to work, this financial loss should factor into your decision.
At-Fault Driver’s Policy Limit
Evaluate whether the policy limit is sufficient to cover your damages.
Time and Energy for Litigation
Lawsuits can take months or even years to resolve. Be prepared for the emotional and physical toll of prolonged litigation.
At-Fault Driver’s Ability to Pay
This is perhaps the most critical factor. If the at-fault driver lacks assets or income, winning a lawsuit may not result in meaningful compensation.

When Settling May Be the Better Option

If the at-fault driver’s financial situation makes it unlikely that you’ll recover additional compensation, settling for the policy limits might be the most practical choice. Your attorney can also help negotiate with the insurance company to ensure you receive the maximum amount available under the policy.

When Filing a Lawsuit Might Be Necessary

If your damages are substantial and the at-fault driver has sufficient assets or an umbrella insurance policy, filing a lawsuit may be worthwhile. Additionally, lawsuits can send a strong message to insurance companies and potentially lead to a higher settlement.

Get Professional Guidance

Deciding whether to settle or file a lawsuit is not a one-size-fits-all decision. Each case is unique, and consulting an experienced auto accident attorney is crucial.

Conclusion

Determining whether to settle for policy limits or file a lawsuit against the at-fault driver depends on the extent of your damages, the at-fault driver’s policy limits, and their ability to pay additional compensation.

At Mercado & Sacramento, PC, we specialize in guiding clients through these tough decisions. We’ll help you assess your options, negotiate with insurance companies, and determine whether pursuing a lawsuit is in your best interest. 📞 Contact us today at (510) 340-4LAW for a free consultation and let us fight for the compensation you deserve.

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