Car Accident Settlement Glossary Terms and Definitions
While legal jargon may sound to many like gibberish, it does have its place in the legal profession. Technical terms are meant to establish an exact meaning without any room for misinterpretation. Unfortunately, to us mere mortals, it becomes a jumble of words with little meaning.
That’s where car accident settlement glossary terms come in. By simplifying legal terms, you gain a deeper understanding that will help you better navigate the claim and settlement process confidently and empower you to work toward a higher offer.
Liability
Liability states who is at fault in a car accident and legally responsible for damages. Determining liability requires facts, like a witness statement from someone who saw the accident. In some instances, both parties, the plaintiff and defendant (to be defined), are held partially responsible. For example, If you are held 40% liable for an accident, you’re responsible for 40% of any damages and will receive 60% of any award.
As you can see, putting legal jargon into simple car accident terms has its challenges.
Negligence
Negligence refers to reckless or careless behavior which causes damage or injury to another person or property. Examples of negligence include taking your eyes off the road to change the radio station or send a text message. Disobeying traffic laws, such as running a red light, also counts as negligent driving.
Comparative Fault
Also known as comparative negligence, this phrase means that both people in a car accident will be assigned partial fault. For instance, you may have looked down at your phone while the other person may have run a red light. The greater your percentage of comparative fault, the less you will recover in damages.
Contributory Negligence
In personal injury claims, a common defense strategy is contributory negligence. Why? If they can prove you are partially responsible for your injuries, their client will pay less. For instance, if you are found to be 40% liable (legally responsible) for your injuries, the compensation will be reduced by 40%.
Damages
You may be entitled to compensation if you have been “damaged” in a car accident. There are several kinds of damages in car accidents, including medical expenses, lost wages, diminished employment opportunities, property damage, and pain and suffering.
Compensatory Damages
Damages are usually divided into compensatory and punitive damages. Compensatory damages refer to actual losses, such as medical bills and lost wages. However, other subjective losses are harder to define and calculate. These are referred to as general damages and include emotional distress, PTSD, and pain and suffering.
Punitive Damages
Punitive damages are a type of punishment for wrongdoing or negligence. A common example of this is drunk driving cases. To prove you have the right to these damages, you must demonstrate that the drunk driver acted in gross negligence or malice.
Economic Damages
As is common in the legal field, car accident legal definitions can overlap. Economic damages refer to the direct losses and costs after a car accident. These form the basis of most injury claims and are easy to calculate. Examples include property damage, medical bills, and lost wages.
Non-Economic Damages
Non-economic damages are subjective losses, such as emotional distress, pain and suffering, and loss of consortium. (See definition for loss of consortium).
Pain and Suffering
You may be awarded damages for pain and suffering if you suffered physical or psychological injuries due to the accident. Physical injuries may include back and neck injuries and broken bones. Psychological injuries may relate to anxiety, depression, and PTSD.
Medical Expenses
Medical expenses are common “damages” that contribute to the money you’re awarded. This may include both past and future medical expenses. Future medical expenses are an estimate of what it will cost for care, including possible surgeries, physical therapy, diagnostic tests, mobility aids, and doctor’s visits.
Lost Wages
Lost wages relate to the amount of money you would have normally earned at your job but did not because of the accident. In addition to past lost wages, you may also be able to claim future lost wages because of your diminished earning capabilities.
Loss of Consortium
Loss of consortium is a claim made by a family member or spouse that refers to the loss of intangible benefits in a relationship. These benefits may include the ability to show affection or engage in marital relations.
Property Damage
Property damage usually refers to the difference in the value of your car before and after the accident. It also includes damage to other physical, non-person-related items, such as fencing, trees, or signage.
Bodily Injury
Bodily injury is any physical injury sustained after a car accident. It may be visible, such as a broken leg, or invisible, such as a traumatic brain injury.
Statute of Limitations
The statute of limitations refers to the time you have to file a lawsuit. Once passed, it is very difficult to take legal action. For instance, in Texas, you usually have two years from the date of the accident to file a lawsuit for personal injury.
Claimant
The claimant is the victim or the person making a claim against the person who caused the accident. Commonly, these claims are brought to their own or the defendant’s insurance company.
Defendant
The defendant is the person responsible for the accident. It’s the person you’re suing who caused your injuries as a result of the accident.
Plaintiff
Plaintiff and claimant are often used interchangeably, but there is a slight difference. The plaintiff is the person initiating a lawsuit.
Insurance Adjuster
An insurance adjuster acts on behalf of the insurance company, gathering information and assessing the claim’s validity. Ultimately, they determine if the insurance company should pay (and how much they should pay) for any damages or injuries.
Settlement Offer
The settlement offer is an agreement between you (the victim) and the person responsible for the accident or their insurance company. The settlement amount is usually determined through negotiations. Accepting the first settlement offer in a car accident case is usually never advised.
Demand Letter
A demand letter is a compelling written claim demanding a specific payout. It’s typically sent to the insurance company of the driver who caused the accident. This letter should include the facts, including a summary of the accident, a list of damages, medical injuries and treatments, and the settlement demand. All relevant documents to support your case should be included, such as the police report, medical records and bills, proof of lost wages, and witness statements.
Policy Limits
Policy limits refer to the maximum amount of money insurance companies will pay for different types of claims on an insurance policy. For instance, let’s say you ran into a tree and were facing $100,000 in hospital bills. If your insurance policy has a policy limit of $50,000, then, theoretically, this is all they are required to pay.
Underinsured Motorist Coverage
Also referred to as UIM, this type of insurance covers situations where you’re in an accident, and the responsible driver does not have enough insurance to cover the cost of bodily injuries or property damage. In these instances, your UIM kicks in, compensating you for damages the responsible party can’t cover.
Uninsured Motorist Coverage
You may also have uninsured motorist (UM) coverage as part of your insurance policy. It helps pay for injuries and damages when the at-fault driver does not have insurance.
No-Fault Insurance
Also, no-fault insurance or personal injury protection is part of your insurance policy and covers you and your passenger’s medical expenses, lost wages, and funeral expenses in the event of an accident, no matter who was at fault.
Third-Party Claim
In a car accident, a third-party claim refers to a claim filed against the driver’s insurance company responsible for the accident. So, filing a claim with the driver’s car insurance company, usually under liability coverage, is considered a third-party claim.
First-Party Claim
A first-party claim is when you file a claim with your own insurance company following a car accident.
Subrogation
Subrogation refers to the right of your insurance company to recoup any costs they may have paid out on your behalf, such as car repairs and medical payments, following an accident that wasn’t your fault. When the at-fault driver’s insurance company reimburses your insurance company, you may get a refund on any deductibles paid.
Total Loss
If your car is “totaled” following a car accident, it means it isn’t repairable, or the cost to repair it is the same or more than the value of your car. In these instances, the insurance company may offer you a cash settlement based on the cash value of your vehicle.
Collision Coverage
This type of auto insurance pays for the cost of repairing or replacing your vehicle following an accident, no matter who was at fault.
Comprehensive Coverage
Comprehensive insurance coverage, also known as “other than collision” coverage, helps pay to repair or replace your vehicle if it’s damaged by something other than an accident. For instance, comprehensive coverage may pay the cost of repair following a natural disaster, a collision with an animal, or theft.
Liability Coverage
Liability insurance coverage goes into effect if you cause an accident. It pays for any repairs to the other driver’s vehicle and their passenger’s medical bills.
Deductible
You have to pay an insurance deductible on a claim before your insurance kicks in. Personal injury protection, uninsured motorists, collision, and comprehensive coverages typically have an insurance deductible. Deductibles usually range from $100 to $2,000, with $500 being the average.
Fault Determination
This is the process of determining who was at fault or responsible for causing the accident through an investigation involving talking to eyewitnesses and the involved drivers, looking at photos, examining vehicle damage, and reviewing the police report. If fault can’t be determined, you may choose arbitration or take the case to court.
Accident Report
In most instances, police officers write accident reports detailing where and when the accident happened and exactly what occurred. These reports may include photographs of the location and vehicles involved.
Witness Statement (or Expert Witness)
A witness statement is a written account of what someone who saw the accident observed. These statements are critical in proving who was at fault. Witness statements may come from passengers in the involved vehicles, pedestrians, first responders, and other drivers who witnessed the accident.
An expert witness is someone who gives their expert opinion. These opinions are based on experience, specialized knowledge, and training. For instance, if you’re trying to convince a jury that your injuries were due to the accident and not pre-existing, you may enlist a medical professional to give their expert opinion. Other experts sometimes called upon include mental health, highway safety, and accident reconstruction specialists.
Deposition
A deposition occurs out of court during the discovery phase of a car accident claim. It’s a statement taken under oath, similar to statements given in the courtroom. During the deposition, lawyers ask witnesses and other parties questions they must answer truthfully. Usually, the plaintiff and the defendant will answer questions that go a long way toward determining the case’s outcome.
Litigation
While almost 95% of car accident cases are settled out of court, the remaining 5% go through the court system, an expensive and costly route. Litigation refers to suing or taking legal action against the person or their insurance company who caused your injuries.
Mediation
Mediation is an alternative dispute resolution (ADR) process commonly used to settle personal injury disputes. Both parties in the accident present their case to a mediator, a neutral third party, who helps them reach an agreement and resolve any disputes. A mediator mediates, which means they do not make a ruling but help the two parties come to an agreement. You may have a personal injury lawyer present at the mediation to advocate for your rights.
Arbitration
Arbitration is another out-of-court ADR process. Instead of a mediator, an arbitrator decides how the dispute will be resolved based on the evidence presented. Binding arbitration means both parties are “bound by” the decision. Non-binding means that either party can reject the decision and proceed to court.
Settlement Agreement
A settlement agreement is a negotiated settlement between you (the injured party), the at-fault driver, or their insurance company. Initial settlement offers are usually low-balled. These binding legal contracts, once signed, are in force and difficult to appeal.
Release of Liability
Before you’re issued a settlement check, you will be asked to sign a release of liability form. Essentially, it’s an agreement that you will not demand more money at a future date. It protects the payer from future litigation and finalizes the settlement. The settlement agreement and release of liability should only be signed after you are confident you are receiving just compensation.
Contingency Fee
Personal injury lawyers may work on a contingency fee basis. This means they only get paid if you receive compensation from the car accident case. The amount they receive is a percentage of the final compensation, agreed upon before they take the case.
Pre-existing Condition
A pre-existing condition refers to any health issue you had before the car accident. These conditions may include back injuries such as degenerative disc disease. Insurance companies commonly use these conditions to limit their liability. However, if the accident exacerbated the condition, the at-fault party may still be held responsible for increased pain and suffering and the financial consequences.
Independent Medical Examination
Known as an IME, the at-fault driver’s insurance company or lawyer usually requests these medical exams. In most cases, an IME is a doctor working for an insurance company. They may try to prove your injuries were not caused by the accident or that you were not injured at all. During an IME, refrain from volunteering information or making small talk, and remember that this doctor is not your friend.
Vocational Rehabilitation
Some people are permanently or temporarily disabled in car accidents. A vocational rehabilitation professional assesses skills, abilities, and disabilities, providing guidance and support in your job search. These professionals are also called upon as expert witnesses. They can testify to the impact of your injuries on your ability to work and the damage to your earning potential.
Permanent Disability
A permanent disability is an injury that prevents you from performing regular daily activities or your usual work duties. These may range from partial to total disability, affect the long-term quality of your life, and impact future earnings and medical costs.
Temporary Disability
Temporary disability may affect your immediate ability to work, but with time and treatments, you are expected to recover.
Mitigation of Damages
Mitigation of damages refers to your duty to take proactive measures to help yourself recover and prevent your injuries from getting worse. It also means you need to avoid unreasonable costs. Mitigation of damages may be used in relation to vehicle storage fees, rental car fees, and lost wages.
Find out the maximum compensation you could receive.
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