The Difference Between a Settlement and an Award

Timing

The timing of settlements and awards can vary greatly. A settlement can be reached at any time following an injury. Settlements usually take place much faster than an award. Settlements should never be considered until the injured party has finished medical treatment, they’ve been released from medical care, and thoroughly understand their damages and impacts of the accident. So in minor injury claims settlements can take place much quicker than in severe injury claims. Awards almost always take longer because the claim must be litigated to get an award.

If an insurance company offers a reasonable amount prior to the Plaintiff filing a lawsuit, it may be advisable for the Plaintiff to resolve the case for that amount as opposed to waiting 18 months or more for the chance to receive a higher amount. The possibility exists that the Plaintiff may in fact receive an amount lower than the insurance company’s initial offer depending upon the verdict of the court.

A plaintiff may be looking at up to 18 months before a case is submitted to a jury. The exact amount of time varies widely based upon the jurisdiction and circumstances of the case. Accordingly, all things being equal it would be better to settle the matter than to wait for an award from a jury.

Amount

If you have an amount on the table and your experienced injury attorney has gotten the insurance company to offer their absolute top dollar, you know exactly how much you can have at that point. On the other hand, if the matter is submitted to a jury, no matter how well-presented the case, the amount the jury may award, if any, is unknown. So the difference here is the risk.

In some instances, it may be worthwhile for a claimant to risk the amount of money that has been offered for the chance to receive a significantly higher award. On the other hand, some believe that a bird in the hand is worth two in the bush, and as long as an offer is in the ballpark, it may be worth getting the matter resolved.

Control

Another strength of the settlement is it gives you some control over the payment, including when it’s received and how it’s structured. In high-value cases, many times the payments are structured over time. This offers protection and increased value. When settling a case, what damages an insurance company agrees to pay for can be negotiated or put into a structured settlement instrument. When a case is submitted to a jury, whatever they award is, is how it will be structured.

If you take a case to trial and receive a verdict, that verdict can be appealed in certain instances. In an appeal, you may be looking at another 1 to 2 years or longer depending upon the extent of the appeal process. Settlements, on the other hand, are not appealed and are much less risky. Having control over the settlement process can be a benefit depending on the circumstances and may encourage some to avoid the risk of trial.

Upside Potential

One reason to take a case to trial is for the opportunity of a big jury verdict. You have probably read about extraordinary sums of money that people have won by going to trial. While the media certainly dramatizes these, they do happen. They do NOT occur nearly as often as most people tend to think. Only the most extraordinary verdicts are generally reported upon, and as such people tend to believe that juries are more generous than they tend to be in reality.

Like many investments, trials are high risk and can be high reward. I can guarantee you that an insurance company has never paid way more than what they think a claim is worth just to be nice! For those who can afford to take the risk or want the opportunity to have their case heard, a trial may worth the time and expense. However, you really should know what the risks are before you go that route.

Time and Expense

Trials are difficult. They are trying both physically and emotionally. They can include personal and character attacks by opposing counsel on you, your family, or your friends. While competent counsel can mitigate some of these issues, they cannot be prevented entirely in all cases. Even the simplest of trials require a lot of time and money during preparation. The toll that trials can take may not be worth the potential reward for some.

Similarities

For all of their practical differences, settlements and awards are both, in their simplest form payment from an insurance company. Both will terminate any further causes of action against the same person or company for the same claim. They also both generally terminate the litigation process, unless some type of appeal is filed as is set forth above. So once you receive your money, the process is concluded.

Settlement or Trial?

Ultimately, there is no completely right answer for whether to settle a case or take it to trial. It gets decided on a case by case basis. Most importantly, you need to have an attorney that is adept at negotiating favorable settlements. It is also imperative that you have an attorney that is willing to, and does take cases to trial on a regular basis. If not, something as seemingly meaningless as your attorney’s reputation with an insurance company or defense firm could compromise the value of your claim. The solution is to sit down with your experienced injury attorney and determine the best course of action for your individual claim.