Why You Should Refuse to Sign a Car Accident Private Settlement Letter

Michael Waks

2 years ago

If you were recently involved in a car accident but your injuries don’t seem too severe, you may be inclined to sign a private settlement letter. As an alternative to filing a formal insurance claim, signing a private settlement allows the at-fault party to pay the victim out-of-pocket for any damages that result.

As appealing as bypassing the claims process might sound, though, there are a few major reasons to avoid agreeing to a private arrangement. Read on to learn what they are:

1. You May Not Receive All the Compensation You Deserve

At-fault motorists are motivated to settle for as little as possible since they’ll be paying the agreed-upon amount out-of-pocket. Consequently, they will often try to convince victims that the damages aren’t all that severe, and they may make some compelling arguments in the process.

You do not want to be swayed by their negotiation tactics, however. Otherwise, you could end up accepting considerably less than you deserve.

2. You May Lose Your Right to Take Legal Action

Once you accept a private settlement, you may lose your right to pursue any further legal action. That means if you later discover that your injuries are more severe than you initially thought, you will have no recourse for seeking additional funds.

3. You May Misunderstand the Terms of the Agreement

Private settlements can be complex, and the terms of the agreement may be challenging to understand. As a result, you may not fully comprehend what you are agreeing to or giving up by accepting the settlement. This can lead to disputes, which can have disastrous consequences for your financial security.

4. You May Run into Trouble with the Insurance Carriers

Should the private settlement fall through—if the other party refuses to pay the agreed-upon amount, for example—you may be inclined to turn to their insurance carrier (or your own) for help. Unfortunately, doing so is unlikely to yield the results you’re hoping for.

If too much time has passed since the crash, the insurance company won’t be able to conduct a comprehensive investigation. As such, they won’t be able to determine liability or follow through with a payout.

It’s also worth noting that while California does not require motorists to report collisions to their insurance providers, many policies have a “cooperation clause.” This clause requires accident victims to notify the carrier promptly after a crash and then assist with all subsequent investigations. Failing to do so could essentially mean waiving the right to compensation.

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Michael Waks

Michael Waks is an aggressive advocate for people who have suffered because of someone else’s actions. Michael decided to become a personal injury lawyer when, while clerking at a legal defense firm during law school, he witnessed and was infuriated by asbestos manufacturers spending millions to avoid taking responsibility for the egregious injuries they caused. Immediately after passing the bar, Michael opened his own firm in Long Beach, CA to help the victims of personal injury accidents get every benefit owed them under the law.