Chapter 6: Settlement
Chapter 6
Settlement
As mentioned above, roughly 90% of the cases that I have handled in Alaska have resulted in a settlement prior to suit being filed, with the exception of claims brought against Geico Insurance Company. The reason that claims settle at such a high rate is because both parties, especially in Alaska, have high exposure and risk associated with going to court. Remember, Alaska has the loser pays rule which states that the loser in litigation will almost always have to pay the costs and part of the attorney fees for the prevailing party. Individuals don’t relish the idea of paying for the lawyer that represents the person who hit them. Insurance companies certainly do not want to pay to defend their own insured and then turn around and also pay for the attorney who is suing them.
As a result, and absent any extenuating circumstances, cooler heads typically
prevail and most cases settle, but what is a fair settlement? As mentioned elsewhere in this book, a fair settlement is a money settlement that quantifies the insurance company’s risks and also compensates the individual who was injured. The best way to measure a settlement is to compare the money paid by the insurance company to an educated guess concerning what a jury would pay for the case if the case were tried. The liability insurance company will pay an amount of money that they think would likely be lost at trial. This allows them to buy their peace with a release.
As mentioned elsewhere, a release is a binding written promise not to sue the at-fault driver. When an insurance company
secures a release in exchange for money paid they no longer have an obligation to defend their insured because no suit can legally be brought against their insured. They have also eliminated the high side risk of a runaway jury verdict. For the plaintiff, the plaintiff has received an amount of money that’s a fair guess of the jury’s likely result. They have not had to incur costs or taken a risk that they may receive much less or perhaps nothing at all. They have avoided up to two years of nervousness and inconveniences associated with litigation.
Of course, not every case settles. The good news is that if you and your attorney do not agree with the insurance company’s evaluation of the likely jury
verdict range, you are not stuck with that evaluation. You can file your case and tell your story to an impartial jury and learn the true value of your case through their verdict.
Whether by settlement or by trial by jury, a competent attorney will maximize the value of your case while minimizing your exposure and inconvenience. As with every choice in life from plumber to physician, please choose your attorney very carefully.
