If you’ve been injured in a car accident or any other preventable incident, it won’t be long before you receive a settlement offer from the at-fault party’s insurance company. On the surface, it looks good, especially when you’ve been unable to work for a while, but how can you be sure that it’s fair?
Unfortunately, you’re right to be wary. Insurance adjusters are trained to minimize payouts, and their first offer is almost never their best. They’re counting on you being so anxious about your financial situation that you’ll eagerly accept whatever they put on the table. So, is it a good settlement offer? Probably not.
In Texas, you have the right to maximum compensation for all damages caused by someone else’s negligence. A fair settlement takes everything into account: your medical expenses, lost wages, pain and suffering, and the long-term impact of your injuries. It should reflect the true cost of your accident, not just what the insurance company hopes you’ll accept. Knowing how to evaluate these offers can mean the difference between struggling financially after your accident and getting the money you need to move forward.
What Makes a Settlement Offer “Good”?
As we stated above, a good settlement offer covers all your damages, both economic and non-economic. It should account for every medical bill, every day of missed work, and every moment of physical pain you’ve endured because of the accident. More importantly, it should consider your future needs if your injuries will require ongoing treatment or if they’ll affect your ability to work in the future
Insurance companies are like any other business, which is why they often make lowball offers that only cover your immediate medical expenses. They’ll ignore future treatment costs, rehabilitation needs, or the fact that you might never fully recover. A truly fair offer, on the other hand, looks at the big picture and compensates you for the full scope of your losses.
Economic Damages: The Foundation of Your Claim
Economic damages are the foundation of any personal injury settlement. Here are the main types of economic damages you can claim in a Texas personal injury lawsuit:
- Medical Expenses: This includes medical bills from emergency room visits, surgeries, physical therapy, prescription medications, and any medical equipment or adaptive devices you may need. Don’t forget about transportation costs to medical appointments, which can add up quickly over months of treatment.
- Lost Wages: Compensation for loss of income covers your regular salary and also overtime, bonuses, commissions, and any benefits you missed while unable to work. If you’re self-employed, calculating lost income becomes more involved but equally important.
- Future Financial Losses: If your doctor says you’ll need additional surgeries, ongoing physical therapy, or long-term care, those costs must be included in any fair settlement offer. Similarly, if your accident injuries prevent you from returning to your previous job or limit your earning capacity, that lost future income should be part of the calculation.
- Property Damage: If your vehicle, personal belongings, or other property was damaged in the accident, repair or replacement costs should be included in your settlement. This includes your car, clothing, electronics, or anything else that was damaged when the accident occurred.
Non-Economic Damages: Pain and Suffering Compensation
Non-economic damages compensate you for intangible losses that may not come with receipts but still have a major impact on your life and well-being. Pain and suffering represents the physical discomfort and emotional distress caused by your physical injuries, such as:
- Chronic pain
- Limited mobility
- Sleepless nights
- Anxiety
- Depression
- Overall reduction in your quality of life
In Texas, there’s no specific formula for calculating pain and suffering, but insurance companies and personal injury lawyers often use multipliers based on your medical expenses. For minor injuries, the multiplier might be 1.5 to 2 times your medical bills. For severe injuries with long-term consequences, multipliers can reach 4 or 5 times your medical costs.
The severity and permanence of your injuries heavily influence pain and suffering awards. For example, a broken bone that heals completely will result in less compensation than a spinal cord injury that leaves you with chronic pain and partial paralysis. Similarly, injuries that affect your ability to enjoy hobbies, spend time with family, or participate in activities you once loved will increase the value of your claim.
Documenting pain and suffering requires additional evidence beyond just medical records. Many accident victims keep a daily journal describing their pain levels, limitations, and how the injury affects their daily activities. Testimony from family members about how the accident changed their personality or abilities can also support their claim for damages.
How Texas Law Affects Settlement Values
Texas follows a modified comparative negligence rule that can affect your personal injury settlement amount. It states that if you’re found partially at fault for the accident, your financial compensation will be reduced by your percentage of responsibility. However, if you’re 51% or more at fault, you can’t recover anything at all.
This rule makes fault determination a critical part of settlement negotiations. Insurance companies will try to shift as much blame as possible onto you to reduce their payout or even eliminate it entirely. They might argue that you were speeding on your motorcycle, not paying attention as you strolled along an uneven sidewalk, or violated traffic laws just before your car accident, which is why you should work with a Texas personal injury lawyer to protect your interests.
Texas also has auto insurance requirements that can limit available compensation in a car accident case. The state requires minimum liability coverage of $30,000 per person and $60,000 per accident. If your damages exceed these limits and the at-fault party doesn’t have additional coverage, you might need to tap into your own underinsured motorist coverage or pursue the defendant’s assets in a personal injury lawsuit.
Knowing these legal limitations helps you evaluate whether a settlement offer is realistic given the available insurance coverage. Sometimes, accepting policy limits is the best option if there are no other sources of compensation, but an experienced car accident lawyer can recommend whether doing so is in your best interests.
Red Flags: Signs of a Bad Settlement Offer
Several warning signs indicate a settlement offer is inadequate. Knowing what they are can help you avoid accepting an offer that falls far short of what you’re entitled to receive. They include:
- Offers That Come Too Quickly: Any offer that arrives within days or weeks of your accident is suspect. Insurance adjusters who rush to settle are usually trying to take advantage of your uncertainty and financial pressure.
- Medical-Only Offers: Be wary of offers that don’t include any compensation for pain and suffering. Even relatively minor injuries involve some level of discomfort and inconvenience that warrant compensation. Insurance companies sometimes make “medical only” offers, hoping you’ll accept quick payment without realizing you’re entitled to additional compensation.
- Ignoring Future Costs: Offers that only cover past medical expenses and ignore future treatment needs are inadequate. If your doctor says you’ll need ongoing therapy or additional procedures, those costs must be included. Similarly, any offer that doesn’t account for lost wages or reduced earning capacity fails to compensate you fully.
- Premature Settlement Pressure: Any offer that requires you to sign a release before you’ve reached maximum medical improvement is unacceptable. You can’t know the full extent of your damages until your condition stabilizes and your doctor can provide a clear prognosis.
If you notice any of these red flags, don’t feel pressured to accept the offer immediately. Take time to review it carefully and get a second opinion from an experienced attorney.
When to Accept vs. When to Negotiate
Timing plays a key role in settlement decisions. The best time to settle is after you’ve reached maximum medical improvement and understand the full scope of your injuries and future needs. This gives you the information necessary to evaluate any offer properly.
Generally speaking, you should only accept a settlement offer when it fairly compensates you for all your damages AND you’re confident about your medical prognosis. If the offer covers your financial losses and provides fair compensation for pain and suffering, acceptance might be the right choice.
If an initial offer clearly falls short of your actual damages (and it almost always will), an experienced lawyer can counter with a higher demand that reflects the true value of your claim. They will also reject offers that ignore future damages or don’t take your long-term prognosis into account. You can’t undo a settlement agreement, so rushing into one before knowing your full damages is an expensive mistake.
The Role of Medical Evidence in Settlement Values
Strong medical evidence makes it more likely that you’ll ultimately receive a reasonable settlement. This includes emergency room records, diagnostic imaging, surgical reports, physical therapy notes, and ongoing treatment plans. If your doctor says you’ll need additional surgeries or lifelong treatment, that medical opinion supports your claim for future damages. Similarly, restrictions on your activities or work capacity should be clearly documented in your medical records.
It is important to note that the insurance company handling your personal injury claim may request that you undergo an independent medical examination, or IME. If you’re seeking benefits from your insurance policy (for example, through Personal Injury Protection (PIP) or Uninsured/Underinsured Motorist (UM/UIM) coverage), your insurance provider has the contractual right to require an IME. Most policies include a clause requiring the insured to cooperate with medical examinations.
If you’re making a claim against another driver’s insurance, that insurer generally can’t force you to attend an IME. You aren’t contractually obligated to them, so participation is voluntary unless you file a lawsuit, and the defense attorney requests a Rule 204 exam under the Texas Rules of Civil Procedure. In that case, the court must approve the request, and the defense must show good cause by arguing that the nature or extent of your injuries is in dispute.
Factors That Increase Settlement Offers
Certain key factors can result in a favorable settlement offer; insurance companies are more likely to offer higher amounts when they’re confronted with strong evidence and the real possibility of losing at trial. They include:
- Clear Liability: When the other party is obviously at fault, it gives you significant leverage in negotiations. Dramatic evidence like security camera footage, witness statements, or police reports that clearly establish fault make your position stronger.
- Severe Injuries With Long-Term Consequences: Permanent disabilities, traumatic brain injuries, spinal cord damage, and other catastrophic injuries naturally generate higher offers. The more your injury affects your daily life and future plans, the more it’s worth.
- Strong Legal Representation: Insurance adjusters know experienced personal injury attorneys will take cases to trial if needed, which creates pressure to make fair offers. They’re more likely to lowball unrepresented individuals who don’t understand their rights.
Let the Texas Law Guns, Injury & Accident Lawyers Evaluate Your Settlement Offer
At the Texas Law Guns, Injury & Accident Lawyers, we’ve reviewed thousands of settlement offers and know what separates fair compensation from subpar amounts. We start by calculating your total damages and then assess your case, the available insurance coverage, and the likelihood of success at trial. This analysis gives us the information needed to determine if any settlement offer meets your needs.
We don’t accept inadequate offers just to close cases quickly. Our job is to maximize your compensation, whether through negotiation or trial, so if you’ve received a settlement offer and aren’t sure if it’s adequate, contact us for a free consultation. You can call our law firm at (210) 800-0000 or fill out our online contact form today.
Related: How to Increase Your Settlement Value
Alexander Begum has tried over 50 trials to verdict and tried or settled over $500 million in cases. Alex is a founding shareholder of the Texas Law Gun, Injury and Accident Lawyers.