In general, a reasonable settlement offer should compensate a victim for their injuries (i.e., medical bills), property damages (i.e., cost to repair their vehicle), and lost income, as well as ancillary costs related to these injuries. However, for most insurance companies, the outer limit of coverage is the policy limit. Therefore, many settlement offers will be constrained between these two competing goals: (1) make the victim whole, and (2) staying within the policy limit.
Illinois Car Insurance Law
Illinois law mandates that drivers carry the following minimum insurance coverage:
- $20,000 for bodily injury; and
- $15,000 for property damage.
Therefore, the maximum settlement that a plaintiff can receive (assuming a party with minimum insurance injured them) is $35,000. The settlements are capped at this amount because an insurance company will usually not proffer a settlement that exceeds policy limits. It is possible to secure a judgment of more than $35,000; however, any excess amount will likely have to be collected against the individual rather than the insurance company.
Negotiating a Reasonable Settlement Offer
Insurance companies are not interested in assisting the victims of car accidents. Insurance companies are only interested in protecting their bottom-line. Therefore, investigators who value and assess claims are incentivized to push plaintiffs to accept the lowest possible offer. Conversely, plaintiffs are incentivized to demand the highest possible offer. The gray area between these two extremes is the reasonable settlement offer.
Insurance companies can and do proffer low-ball settlements to victims not represented by a lawyer because they expect that unrepresented victims do not understand how to value their claim accurately. Any reasonable settlement offer should take into account the following damages. First, the offer must compensate the victim for their bodily injuries, including medical and physical therapy. Second, it must include the cost to repair or replace the vehicle (at the fair market price of the damaged car). Third, it should also compensate the victim for their lost wages. Lost wages are monies that the victim would have earned but for the accident (i.e., missed work due to hospital stays). Finally, the settlement should also provide compensation for ancillary costs—for example, the cost of the rental.
Negotiations should include discussions of each of these types of damages. Further, the victim should be able to calculate how much of each category of harm is included in the final settlement offer.