It is through a process called a “claim” that an injured or damaged party receives compensation for an auto accident from an insurance company. While some claims proceed all the way to a courtroom, many claims are resolved outside of court. When this happens it is referred to as “settlement” in the legal world. Settlements are much cheaper than a lawsuit and are therefore more attractive to insurance companies.
The Costs of a Lawsuit
Typical costs associated with a lawsuit include: filing fees, mailing and shipping charges, photocopying fees, expert witness fees, travel expenses, document production fees, and charges to create visual aids. While filing fees are only charged once, the rest of these expenses are incurred throughout litigation.
The main type of fee associated with a lawsuit is attorneys fees. The amount of fee an attorney charges per hour varies, but can range anywhere from $175-$400.00 per hour, for more experienced attorneys. Hiring more than one attorney means that each attorney simultaneously charges their hourly fee while in the courtroom or working on the case in their office. Many states permit the winning party to be awarded attorney’s fees as part of their damage awards. In these states, the losing party is charged with paying any and all attorney’s fees associated with the winning party’s handling of the case.
The Main Cost of Litigation
The main cost of a lawsuit, though, is the final award, if any. Submitting a lawsuit to a judge or jury removes it from the control of the insurance company, making it possible that the amount of award could be substantially higher than desired or anticipated. In this situation, the only remedy is to appeal the award, which requires filing and litigating the same case all over again in a higher, appellate court.
Common Settlement Fees
In contrast to litigation, settlement fees include nothing but the costs of producing documents and investigating the claim. If a mediator is used during negotiations, his fee would also be included in settlement costs.
If the claimant has hired an attorney, the attorney’s fees are also costs of settlements, but as settlements are much simpler and faster, they are often much smaller than if the case proceeds to litigation. Furthermore, in settlements the party making the compensation payment is not required to pay the other side’s attorney’s fees, unless agreed to in advance, this removes this cost from the insurance company’s table.
Getting Legal Help
Because of their cheaper cost, insurance companies are usually more than willing to settle a claim out of court. If you have been involved in an auto accident and would like compensation for your injuries or damages, seek legal advice. An attorney will review your case and discuss with you the possibility of settling your claim outside of court.
