Still in Pain. Can I Sue if My Cash Settlement Wasn’t Enough?

We got this question from a reader: “I received a cash settlement from insurance, but it wasn’t enough. I’m still in pain. Can I sue?”

This question has both a simple answer and a more realistic, more nuanced answer.

The simple answer is yes. You can sue. But there’s a huge caveat to this answer. That caveat is: Even though you can sue, a judge will likely dismiss your lawsuit. Moreover, it might cost you money if the judge holds you responsible for the defendant’s court costs.

The more realistic answer is that generally, no. You cannot successfully sue an insurance company after getting a cash settlement.

What Happens When You Settle a Claim for a Cash Settlement?

If you’re in an accident and file a claim, a series of events begins. Your insurer will ask you to complete some paperwork and they’ll conduct an investigation. They will review police reports, witness or driver statements, and medical records.

Once an insurance company completes its investigation, it will typically offer a cash settlement. This settlement will likely be a one-time payment. If it’s for a car accident, the cash settlement will pay for car damages, medical bills, and lost property. If you have an attorney, you may also receive money for pain and suffering.

Doing a little research will tell you that insurance companies sometimes offer a quick cash settlement. That’s because they want to settle for the best price possible. They might offer what seems to be a large sum that they hope you’ll accept quickly without negotiation. That’s because a lay person might not truly understand what their ongoing costs relating to the accident will be.

Related: I Sued But Still Have Significant Injuries. What Should I Do?

Why Does a Cash Settlement Mean I Can’t Sue?

Settlements are legally binding agreements. In the simplest terms, an insurance company will agree to pay you a set amount of money. In exchange, you agree to close the claim. This means you’re agreeing to not sue them or request any more money after you settle.

Even if you ignore the fact that you signed a settlement agreement and file the paperwork to sue the insurance company for further pain and suffering, chances are good that the judge will dismiss your suit when they learn that you already received a cash settlement.

Furthermore, the insurance company can request a judgment from the court. That judgment would assume you pay all legal fees they incur to defend themselves. This can translate into even more money out of pocket for you, in addition to increased stress and aggravation.

Are Cash Settlements From Insurance Always Final?

Almost always, yes. But there are exceptions. If you can prove that the insurance company was negligent or committed fraud, for example, you might have a successful case. Or if you can prove that you were coerced into the settlement against your will, you might be able to win your case in court.

But if your claim is simply that your pain has continued longer than you anticipated, chances are you cannot successfully sue for additional money.

How Do I Know What to Settle For?

Because they’re legally binding, understanding exactly what costs lie ahead is vital to knowing whether or not to accept a cash settlement. But how can you know how long your pain and suffering might last? Or how much you’ll need to cover those expenses several years in the future?

There’s one method that insurance companies use to calculate pain and suffering, which is to multiply your total expenses by three. So if your property damage was $10,000 and your hospital bills were $10,000 and your lost time from work was $2,500, the insurance company would multiply that sum ($22,500) by 3 for a settlement amount of $67,500.00.

Another way to calculate pain and suffering uses a daily rate. In that method, an amount will be determined and multiplied by the number of days you expect to be in treatment or taking medication.

No matter the method, your cash settlement amount isn’t a clear indication of how much you’ll need to cover your costs plus pain and suffering. This is because the calculations are estimates, not absolutes.

Is Hiring an Attorney Worth It?

This is one of the many reasons why working with an attorney can be beneficial. An attorney can help you understand what your true, ongoing costs might be and then help you win that settlement amount from the insurance company. Lawyers can also help you understand whether you have a right to reopen your suit after you settle. Because these attorneys work on contingency, they only take your case if they think you’ll likely win. That saves you money and aggravation.

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Lisa Allen

Lisa Allen is a writer and editor who lives in suburban Kansas City. She holds MFAs in Creative Nonfiction and Poetry, both from the Solstice Low-Residency Program in Creative Writing at Pine Manor College. Prior to becoming a writer, Lisa worked as a paralegal, where she specialized in real estate in and around Chicago.