Private Settlement Agreements Following a Car Wreck: A Guide to the Process
Private Settlement Agreements Explained
A private settlement agreement is a contract between the parties relating to the settlement of any disputes that may arise from a minor collision. Unlike its formal counterpart, the court order, a private settlement agreement contains specific, written terms and conditions. It will typically include references to any releases or non-disclosure agreements that may become relevant based on the circumstances involved in the minor collision. It is important to note that a private settlement agreement is not the same as a formal settlement or release of any legal rights. A private settlement agreement is essentially an agreement to agree after all of the particulars of the minor collision are known. In circumstances involving minor collisions , a private settlement agreement can provide the best avenue for the parties involved. Unlike a formal settlement or release, a private settlement agreement allows the parties to retain their various rights and legal remedies – but the parties become bound by the terms and conditions contained in the private settlement agreement.
Benefits of Private Settlements
One of the primary benefits of a private settlement is the ability to keep the matter out of court, thus avoiding the hassle of a trial and lengthy resolution time. A private settlement also allows parties to maintain the element of privacy that is often disclosed in open court proceedings. Settling a case outside of court often means that the issues are resolved in a more rapid time frame than a court may provide. A private settlement also offers the benefit of lower costs for the parties. Litigating in court can be expensive, from legal fees to witness and expert expenses. Once a settlement is agreed to, much of those costs are avoided. Finally, avoiding the stress of litigation and moving on with your life is one of the most beneficial reasons to opt for a private settlement.
Downsides to Private Settlements
Private settlement agreements can have downsides you should be aware of before making a final decision. First, such agreements are not subject to any form of legal review. Instead of your case being brought before a judge who must decide whether or not to approve the agreement, it is instead just an agreement between the involved parties, and the judge is not a part of the process. Because it is not reviewed, the terms may turn out to be unfair. You could end up agreeing to less than what you would have otherwise gotten through the court and a trial.
An agreement that is not approved by a judge also has the added downside of making it difficult to enforce. If you agree to settle your case based on the other person making monthly payments for a particular period of time, there is not much you can do if they miss payments down the line. Rather than the judge overseeing the enforcement process, you are now at the mercy of the good standing of the other party and their ability to pay.
While the exact financial details of your agreement are still your own business, you should be aware that making a deal with the other party may involve their insurance company as well. There may not be a formal third-party intermediary, but it’s still important that any conditions for payment you agreed upon are outlined in writing. For example, if the other party agrees to pay your medical bills, there’s no guarantee that they will come through on this commitment unless it is in the custody of a neutral third party.
Consider all of the possibilities before just jumping into a private settlement agreement.
Components of a Private Settlement Agreement
For a private settlement agreement to be valid, it must include a number of essential elements. First, the terms of the private settlement agreement should specify the details of the car accident, including its date and location. Second, the agreement should acknowledge liability on the part of the driver responsible for the accident. Third, the amount of compensation being offered should also be expressly detailed in the private settlement agreement. Although car insurance companies typically dictate the terms of private settlement agreements, a policyholder can include information about whether the settlement is full and final, as well as disclaimers about fairness and adjuster authority. Finally, some private settlement agreements include confidentiality clauses, which prohibit both parties from disclosing the terms of the settlement to anyone other than their attorneys.
When to Settle a Car Wreck Case Privately
Opting for a private settlement after a car accident is not advisable in all circumstances. Among other considerations, you must take into account the severity of the accident, the cost of damages and the willingness of the parties to negotiate. When these factors are present, a private settlement may be appropriate.
When the accident is not overly severe and the property damage is relatively low, your insurance company may be willing to settle the matter privately. Also, the willingness of the other party or their insurance company will also play a substantial role in whether a private settlement is a possibility. If they do not feel the need to pursue litigation and have full confidence in the amount of damages requested, they may be more inclined to settle .
The value of damages can be an important consideration when deciding whether to opt for a private settlement after a car accident. If for example there has been significant damage to your automobile or you have incurred very high medical bills related to the accident, it is highly advisable to pursue the matter through the courts or with an insurance company. The risk that one or both parties will be financially responsible for an undiagnosed or poorly documented medical injury is significant.
If the insurance companies involved also feel strongly that there is a substantial amount of personal injury to deal with, they will likely feel a private settlement is not in their best interests.
Finalizing a Private Settlement Agreement
When you’ve reached a private settlement, you’ll need to formalize the arrangement with a written agreement. Even if it’s just between two individuals, having a written contract gives both parties protection. Following a few steps can help you finalize the settlement and create a legally binding document.
1. Agree on Terms
The details of your settlement need to be agreed upon beforehand. Elements to include are the amount of compensation (if any), the payment arrangement, an agreement for some or all medical bills to be paid, as well as their amount, who will pay for any missed work, provisions for uninsured/underinsured motorist coverage recovery, etc. If you’re both in agreement, put all the terms in writing.
2. Draft the Agreement
The written agreement should include the basic identifying information for both parties, such as name, address, email, phone, dates of birth, etc. The next section should include the basic facts of the car accident: date, location, cars involved, drivers involved, insurance companies involved, and police report number. Then include the specific terms of the settlement. Both parties should receive an identical copy to sign.
3. Sign and Notarize
Both parties must sign the settlement agreement to make it legally binding and enforceable. Notarizing the contract provides an additional level of protection. Once it’s signed, each party should keep their copy of the document for safekeeping. It’s best to inform all auto insurance providers involved about the terms of the agreement in case the amount exceeds their maximum limits of liability.
Legal Considerations and Insights
While private settlement agreements can provide flexibility and closure for both parties, it is essential to ensure that the agreement is legally binding and enforceable. This is especially true in situations where a minor may have been involved, as court approval or oversight may be necessary to ensure the child’s best interests are protected. To avoid potential pitfalls, it is advisable to consult with a lawyer experienced in handling car accident cases and private settlements . An attorney can help you understand the legal implications of your settlement and the steps necessary to make it legally binding and enforceable. An attorney can also possess access to industry standard settlement documentation to ensure that you will be receiving compensation into the future when appropriate. An attorney will also be able to advise if you should go forward with your private settlement or pursue further legal action.