How Do Car Accident Settlements Work?

Learn how accident settlements work—from the moment a crash happens to the day compensation is finally in your hands. Our Chicago car accident attorneys will cover each key step in the settlement process, explain the types of damages you may be entitled to, and discuss how a lawyer can help you pursue a fair settlement.

What is a Car Accident Settlement?

A car accident settlement is a legally binding agreement between the injured party and the at-fault driver’s insurance company to resolve a car accident claim without going to court. Instead of a judge or jury deciding the outcome, both sides agree on a compensation amount that covers the victim’s damages, such as medical expenses and lost income.

Once both sides sign the settlement agreement, the case is considered resolved. In exchange for receiving compensation, the injured party usually agrees not to pursue a lawsuit against the other driver.

The Car Accident Settlement Process

The car accident settlement process involves several key steps, and knowing what to expect at each stage can help you avoid costly mistakes.

Step 1: Seek Immediate Medical Attention

Even if your injuries seem minor at first, it’s critical to get checked out by a doctor as soon as possible. Some injuries—like concussions, soft tissue damage, or internal trauma—can take hours or days for symptoms to appear.

Getting prompt medical treatment also creates essential medical records, which serve as key evidence in your claim. If you delay care, the insurance company might argue your injuries weren’t serious or weren’t caused by the car accident.

Step 2: File an Accident Report and Gather Evidence

According to 625 ILCS 5/11-407, drivers must notify the police immediately if the accident involves injury, death, or more than $1,500 in property damage. Failure to report could result in license suspension or other penalties.

The responding officer will create a police report, which is essential evidence in the settlement process. While at the scene, you or someone on your behalf should also:

• Take photographs of the accident site.
• Collect witness statements and contact information.
• Get details from all parties involved, including the at-fault driver’s insurance and registration.

Step 3: Hire a Car Accident Lawyer

Most car accident claims hinge on proving negligence and countering any arguments made by the insurance company to reduce or deny your claim. In addition to state laws, Chicago has specific municipal codes that apply to traffic laws and driver responsibilities.

Hiring a personal injury lawyer gives you a significant advantage. We can help prove liability, gather supporting evidence, and prevent you from being unfairly blamed.

Step 4: Filing an Insurance Claim and Sending a Demand Letter

Your attorney will help you file an insurance claim with the other driver’s insurance company. In some cases, you may also need to notify your own insurance provider, especially if the other driver is uninsured or underinsured.

After filing, your attorney will prepare a demand letter. This letter outlines:

• The facts of the vehicle accident;
• A summary of your injuries and required treatment;
• Financial losses like lost wages, medical bills, and property damage;
• Non-financial harm, such as pain and suffering;
• The amount of compensation you are demanding.

Step 5: The Insurance Company’s Investigation

The insurance company is entitled to examine the evidence and request additional documentation. But be cautious—insurance adjusters often try to obtain recorded statements or access to your full medical history.

In Illinois, you’re not legally required to give a recorded statement to the other party’s insurer, and doing so without legal counsel is risky. An experienced attorney will advise against this unless absolutely necessary.

Additionally, Illinois law protects consumers from “bad faith” insurance practices under 215 ILCS 5/154.6, which prohibits misrepresenting facts, making unreasonably low offers, or delaying the claims process.

Step 6: Receiving and Evaluating the Initial Settlement Offer

In most cases, the first offer is significantly below what your case is worth. Illinois law doesn’t require you to accept any offer, and your attorney will likely recommend rejecting it unless it covers all your damages.

Step 7: Negotiating a Fair Car Accident Settlement

Your personal injury attorney will start the negotiation phase in an attempt to reach a fair settlement—one that reflects the true extent of your damages.

Insurers are notorious for low offers, especially if they think you’re unfamiliar with the claims process. A skilled attorney will challenge their offer, present counter-evidence, and apply pressure backed by case law and statute, often resulting in significantly better outcomes for the client.

Step 8: Filing a Car Accident Lawsuit (If Necessary)

If settlement negotiations stall or the insurance company refuses to offer fair compensation, your attorney may advise filing a lawsuit in civil court. The personal injury litigation process includes:

• Filing a complaint in court
• Serving the at-fault driver
• Discovery phase (exchange of evidence and depositions)
• Mediation or pre-trial settlement discussions
• Trial, if no settlement agreement is reached

Step 9: Reaching a Settlement Agreement or Going to Trial

Many cases settle after the lawsuit is filed but before a trial begins. At this point, the insurance company often re-evaluates its position, especially when confronted with strong evidence and an assertive attorney.

Ultimately, the decision to accept a final settlement agreement or proceed to trial rests with you.

Step 10: Receiving Your Settlement Payment

Your compensation may come in a lump sum or a structured settlement (paid over time), depending on the terms. In most cases, the car accident lawyer receives the check, deducts their contingency fee (typically 33–40% in Illinois), and then forwards the remaining amount to you.

Before distributing funds, your attorney will also pay off any medical bills, healthcare liens, or outstanding expenses related to the accident.

This marks the end of the process, but if new costs or issues arise (like complications from injuries), your lawyer can advise you on the next steps.

Damages Available in Chicago Car Accident Case Settlements

A successful car accident settlement should fully compensate you for everything you’ve lost. Under Illinois law, injured victims are entitled to economic and non-economic damages, and in rare cases, punitive damages.

Economic Damages

Economic damages are the tangible, out-of-pocket losses you’ve suffered due to the accident, supported with documentation like bills, pay stubs, and receipts.

They include:

• Medical expenses: Hospital bills, ambulance costs, doctor visits, prescriptions, surgeries, physical therapy, and future medical expenses for ongoing care.
• Lost wages: Both current income lost and future lost wages if you’re unable to return to your job or need to reduce hours.
• Personal property damage: Repairs or replacement of your vehicle and other items damaged in the accident.
• Out-of-pocket expenses: Transportation to medical appointments, home health services, and any necessary medical equipment.

Illinois does not cap these damages in personal injury cases, meaning you can recover the full amount you’ve lost if properly documented.

Non-Economic Damages

Non-economic damages are intangible losses — the human cost of being injured in a car accident. While harder to quantify, they often make up a significant part of a settlement, especially in cases involving long-term or permanent injuries.

They include:

• Pain and suffering: Physical pain, discomfort, and reduced quality of life
• Emotional distress: Anxiety, PTSD, depression, or trauma caused by the accident
• Loss of enjoyment of life: The inability to engage in hobbies, sports, or everyday activities
• Loss of consortium: If your injuries have impacted your relationship with a spouse or partner

Calculating damages like pain and suffering often involves testimony from doctors, therapists, and even family members. Illinois doesn’t impose caps on non-economic damages in most car accident cases, allowing for substantial recovery in serious situations.

Punitive Damages

While rare in standard car accident cases, punitive damages may be awarded in Illinois if the at-fault driver acted with extreme negligence or willful misconduct. Examples include:

• Drunk driving
• Drag racing
• Hit-and-run accidents

Under 735 ILCS 5/2-1115.05, punitive damages are designed to punish the wrongdoer and deter similar behavior, not to compensate the victim. That said, if your lawyer believes these damages are warranted, they can be included in your personal injury lawsuit.

Factors That Affect the Value of Your Car Accident Settlement

The value of a car accident settlement depends on several key factors.

The more serious your injuries, the higher your potential compensation. Claims involving permanent disability, traumatic brain injury, or chronic pain usually result in larger settlements.

Well-documented evidence helps prove liability and damages, and deters low offers from the insurance company.

No matter how strong your case is, your car accident settlement is often limited by the at-fault party’s insurance coverage. In Illinois, the minimum liability coverage is:

• $25,000 per person for bodily injury
• $50,000 per accident
• $20,000 for property damage

If your damages exceed these limits, your attorney may explore other options, such as filing a claim under your own uninsured/underinsured motorist policy or pursuing a personal injury lawsuit against the at-fault party directly.

Witnesses can play a key role in verifying how the car crash occurred. Their credibility—how clearly they recall events, whether they have any bias, and whether their story aligns with physical evidence—can strengthen or weaken your claim. Solid witness statements are especially important when fault is disputed or when there are no surveillance videos.

Finally, the experience and reputation of your car accident lawyer can significantly impact the outcome. A skilled negotiator who understands Illinois personal injury law, local court tendencies, and how to deal with insurance companies can often secure a far higher settlement than someone representing themselves.

How Long Does the Car Accident Settlement Process Take?

The car accident settlement process in Illinois can take anywhere from a few months to a few years. Simple cases with clear liability and minor injuries may settle in under six months. Complex cases involving serious injuries, multiple parties, or disputed fault often take longer.

Extended medical treatment, delays in obtaining records, uncooperative insurance companies, and ongoing settlement negotiations can extend the process. While it’s tempting to settle quickly, patience often leads to a far better outcome.

Working with an experienced car accident attorney can help move things along. They’ll handle follow-ups, push for quicker responses, and avoid unnecessary delays.

Illinois Car Accident Statute of Limitations

In Illinois, the statute of limitations for most personal injury claims arising from a car accident is two years from the date of the incident (735 ILCS 5/13-202).

There are limited exceptions—for example, if the injured party is a minor or if the injury was not immediately discoverable. Still, these are narrow and fact-specific.

Working with an experienced car accident lawyer early in the legal process helps ensure all deadlines are met and your right to seek compensation is preserved.

Dealing with Insurance Companies

It’s important to understand that the insurance company—even your own—is not on your side. Their priority is to limit financial settlements, not to ensure you receive fair compensation. Common tactics include:

• Offering a quick but low initial settlement offer
• Disputing liability or downplaying injuries
• Requesting unnecessary documentation
• Delaying communication to pressure a settlement

Before providing a statement or signing any documents, consult with a car accident lawyer. They can handle communications, protect your rights, and hold the insurer accountable during the car accident settlement process.

Why You Need a Lawyer to Navigate the Auto Accident Settlement Process

Navigating the process without legal representation puts you at a serious disadvantage. Insurance companies have teams of adjusters and attorneys trained to reduce or deny claims. An experienced car accident lawyer levels the playing field and protects your interests at every stage.

Benefits of working with legal counsel include:

• Accurate valuation of damages, including present and future medical expenses and lost wages;
• Skilled settlement negotiations backed by evidence and legal precedent;
• Protection against unfair tactics from the insurance company;
• Ensuring compliance with Illinois law and procedural deadlines.

How Fault Affects an Auto Accident Claim

Under 735 ILCS 5/2-1116, Illinois applies a modified comparative fault system to personal injury claims, including those arising from car accidents. This rule allows injured victims to recover damages only if they are not more than 50% at fault for the accident.

What Evidence is Used to Support a Car Accident Claim?

Strong evidence is critical in building a successful car accident claim and achieving a favorable outcome during the legal process. Key evidence may include:

• Accident and police report documenting the scene and officer observations;
• Medical records linking injuries directly to the crash;
• Photos of vehicle damage, injuries, skid marks, and road conditions;
• Witness statements from bystanders or other drivers;
• Proof of medical bills, lost wages, and out-of-pocket costs;
• Vehicle repair estimates or evidence of property damage;
• Expert testimony (e.g., accident reconstruction or medical experts).

An experienced personal injury attorney will organize and present this evidence strategically, helping to strengthen your case during settlement negotiations or litigation.

FAQs on How Car Accident Settlements Work

What if the Other Driver Is Uninsured?

If the at-fault party is uninsured, you may still be able to seek compensation through your own uninsured motorist coverage, which is required in Illinois. Your car accident lawyer can help you file a claim with your insurance company and negotiate a fair settlement under your policy.

What if I Am Partially at Fault?

If you are determined to be 50% or less at fault, your compensation is reduced in proportion to your percentage of fault. For example, if you’re awarded $100,000 in damages but are found to be 30% at fault, the recoverable amount would be reduced to $70,000. However, if you’re deemed more than 50% at fault, you’ll be barred from recovering any damages.

What if the Insurance Company Denies My Claim?

A denial is not the end of your case. Your attorney can gather additional evidence, file an appeal, or pursue a lawsuit in civil court. In many instances, denials can be reversed through strong advocacy and legal action.

Contact an Experienced Attorney for a Free Case Evaluation!

At Rosenfeld Injury Law, we have successfully represented thousands of clients in car accident cases, recovering millions in verdicts and settlements.

Our personal injury lawyers in Chicago offer a free consultation with no obligation, and you don’t pay anything unless we win. From handling the insurance company to negotiating a fair settlement or taking your case to trial, we’re here to protect your rights and fight for the compensation you deserve.

Call (888) 424-5757 or fill out our online form.

All content undergoes thorough legal review by experienced attorneys, including Jonathan Rosenfeld. With 25 years of experience in personal injury law and over 100 years of combined legal expertise within our team, we ensure that every article is legally accurate, compliant, and reflects current legal standards.