After a serious accident, there are two (2) different methods by which you can obtain financial compensation for your injuries and other losses. You can file a personal injury insurance claim and try to negotiate a settlement, or file a personal injury lawsuit against the at-fault party.

An insurance claim and a personal injury lawsuit are separate and distinct from one another.

Among other factors, which one is best depends on the nature of your accident and the severity of your injuries. This page provides some basic information about insurance claims and personal injury lawsuits so that you can better understand which one best applies to your situation.

Personal Injury Insurance Claim vs Law Suit

Filing an Insurance Claim

If you were involved in an accident and were injured or suffered property damage (or both), you may be able to file an insurance claim to obtain financial compensation for your injuries and other losses. Generally, the claims process is quite simple. While every insurance company handles insurance claims for personal injuries differently, the process will look something like this:

  • The injured person files a claim.
  • The insurance company opens an investigation into your claim.
  • The injured person writes a demand letter to the insurance company.
  • The insurance company makes a decision about the injured person’s claim.
  • The injured person and the insurance company may negotiate a settlement.
  • The injured person accepts or rejects the settlement offer.

If you were injured in an accident, you must first notify your insurance company (or that of the at-fault party) that you were involved in an accident and suffered injuries. You should do so as quickly as possible so that the insurance company (or companies) involved can begin investigating your claim. Some insurance companies require claims to be filed within 24 to 48 hours of an accident. Ideally, you will have obtained contact information for the at-fault party’s insurance company at the scene of the accident. If not, most insurance companies have an 800 number or online form that injured people can use to file a claim.

When you file a personal injury insurance claim, you should be completely honest with the insurance company about what happened in your accident and how badly you were hurt. Any intentional misrepresentations to an insurance company can result in serious legal consequences and can hurt your chances at obtaining a fair settlement.

Once the insurance company is notified of your accident, it will generate a claim number and assign your claim to a claims adjuster. The claims adjuster will open a claim and contact you to begin investigating your claim.

How the Insurance Company Investigates Your Claim

Before the insurance company can offer you a settlement, the claims adjuster must verify that the accident was caused by his or her “insured.” The claims adjuster needs proof that the insured party was negligent, and that your injuries are severe enough to qualify for a settlement. The claims adjuster will investigate the facts of your case. The investigation into your claim may include:

  • Reviewing your medical records and any bills for medical treatments;
  • Speaking with you and any witnesses to the accident about what occurred;
  • Reviewing any police reports filed after the accident;
  • Reviewing any photo or video evidence of the accident;
  • Returning to the scene of the accident to take additional photos or videos;
  • Looking over any damage to your personal property (such as your car) and estimating repair costs; and
  • Evaluating any other evidence you or others provide.

During your conversations with the claims adjuster, you must be completely honest about what happened and support your case with evidence. The success of the settlement negotiation process generally depends on how well you can prove fault and how much evidence you have about your injuries, so it is best to be very prepared and organized whenever you speak to the claims adjuster.

Be aware that insurance adjusters are trained at what they do and we always recommend that you do not talk to the insurance adjuster of the driver who was at fault until you have consulted with a lawyer.

To obtain an insurance settlement that takes into account your injuries and other losses, you will need to convince the adjuster that:

  • Their insured’s negligence was the cause of the accident and your injuries;
  • Your injuries were real and required (or will require ongoing) medical attention;
  • The cost of treating your injuries was (or will be) substantial;
  • Any out-of-pocket expenses you incurred while treating your injuries (such as medications, crutches, or transportation to doctor appointments) were real and directly related to the accident;
  • If you were unable to work because of your injuries, that your injuries were serious enough to prevent you from working;
  • If you are asking for compensation for pain and suffering, that you actually experienced pain and discomfort following the accident.

You can write a letter to the insurance company known as a demand letter that discusses each of these these points in greater detail. The claims adjuster will use this document as a framework for evaluating your claim.

Sending a Demand Letter

A demand letter is a letter that sets forth facts about your accident and injuries, and how much money you think you are entitled to receive based on these facts. The demand letter serves as a frame of reference for the claims adjuster, who will make you a settlement offer based on your demand and his or her investigation into your claims. You should not send a demand letter to the insurance company until you have neared the end of your treatment. That way, your demand letter can accurately reflect the total amount of your damages. What you set forth in the demand letter can be used against you at a later time, and so it is always recommend that you not send a demand letter until you have consulted with a lawyer.

You should not send a demand letter to the insurance company until you have neared the end of your treatment.

That way, your demand letter can accurately reflect the total amount of your damages. What you set forth in the demand letter can be used against you at a later time, and so we always recommend that you not send a demand letter until you have consulted with a lawyer.

To learn how to write an effective demand letter, click here.

After you have sent the claims adjuster your demand letter and the insurance company concludes its investigation into your personal injury claim, the claims adjuster will make a decision about your personal injury claim. The decision may be to deny your claim, paying you nothing, or paying you the entire amount included in your settlement demand letter. Typically, the claims adjuster’s initial settlement offer is somewhere in between.

Negotiating a Settlement

Once you receive a decision from the claims adjuster about your claim, you can begin negotiating a settlement with the claims adjuster. Whether you will be able to convince the insurance adjuster that you deserve more money than he or she initially offered depends on the strength of your evidence and the severity of your injuries.

Accepting or Rejecting the Insurance Company’s Offer

At the conclusion of the settlement negotiation process, you must decide whether to accept or reject the insurance company’s offer. Since determining whether a settlement offer is fair or not is a complicated process, it is always recommend that you consult with an experienced personal injury lawyer before accepting an offer from an insurance company. If you believe that the insurance company has offered you a fair settlement that takes into account the full value of your injuries and other losses, you may accept the offer.

If you cannot negotiate a fair settlement offer with the insurance company, you may reject the insurance company’s settlement offer. At this point, you may need to consult with a personal injury lawyer about filing a personal injury lawsuit.

Filing a Personal Injury Lawsuit

If you cannot reach a settlement agreement with the claims adjuster, you may need to file a personal injury lawsuit. This may also be true if the total value of your injuries and other losses exceeds the policy limit of the insurance policy applicable to your claim. If you were involved in a very serious accident and sustained major injuries, filing a personal injury lawsuit may be the only way to obtain adequate compensation for your injuries.

Technically, you can file a personal injury lawsuit as soon as you are injured in an accident and at any point before the statute of limitations expires. But for most minor accidents, filing a lawsuit should be a last resort. It is typically recommended that you only consider filing a personal injury lawsuit if settlement negotiations have broken down and other methods of resolution – such as arbitration or mediation – have failed.

If you believe that you may need to file a lawsuit, you should contact an experienced personal injury lawyer right away. Filing a personal injury lawsuit can have serious legal and financial consequences, and you should never do so without the advice of a licensed attorney in your area.
By filing a personal injury lawsuit, you may be able to secure money damages that take into account:

  • Medical bills you incurred in treating your injuries;
  • Physical pain, emotional suffering, and mental anguish caused by your injuries;
  • Wages you lost because you could not work while you recovered from your injuries;
  • eduction in your overall earning capacity as a result of your injuries;
  • Disability accommodations for your vehicle and home;
  • Diminished quality of life; and
  • Loss of companionship and support.

It is important to understand that you will incur various expenses in filing a lawsuit. Generally, your personal injury lawyer will deduct these expenses from the damages awarded to you should you prevail in your lawsuit. These expenses might include:

  • Filing fees for your complaint;
  • The cost of having a sheriff or process server serve the defendant with your lawsuit;
  • Court reporter costs for depositions and transcripts;
  • Fees for experts who will testify at your trial;
  • The cost of copying medical records, police reports, and witness statements; and
  • Your lawyer’s contingency fee or rate as set forth in your representation agreement.

You should never file a lawsuit out of spite for the at-fault party or because you’re angry over the amount of money the insurance company offered you to settle your claim. You should make an objective, informed decision about whether a personal injury lawsuit is the appropriate choice for you based on the advice of a reputable, licensed personal injury lawyer.

Injuries Serious Enough to Merit a Personal Injury Lawsuit

There are certain injuries that are so serious that they usually merit filing a personal injury lawsuit if the claim cannot be settled with the insurance company. To fall into this category, your injuries usually must have caused considerable pain and suffering, and either be permanent, or significantly impair your ability to engage in normal, daily activities for an extended period of time.

Examples of these types of serious injuries include:

  • Death,
  • Dismemberment,
  • Significant disfigurement or scarring,
  • Bone fractures,
  • Loss or significant limitation of a body organ, and
  • Herniated discs or other types of injuries that have or will require serious and expensive surgery
  • Any injury that prevents you from engaging in normal daily activities for an extended period of time (typically 90 or more days).

Regardless of the severity of your injuries, you should make the decision to file a personal injury lawsuit carefully. To learn how to contact a personal injury attorney in your area and what questions to ask when you do, visit:

This page is not a substitute for consulting with an attorney. If you are unsure about whether to initiate an insurance claim or a personal injury lawsuit, contact an experienced personal injury lawyer right away. Only a licensed attorney in your area can give you legal advice about your situation.

Next: First Party Claims vs. Third Party Claims

Disclaimer: Information provided on this site is NOT formal legal advice. It is generic legal information. Under no circumstances should the information on this site be relied upon when deciding the proper course of a legal action. Always get a formal case evaluation from a licensed attorney if you think you might have a personal injury lawsuit.