How Personal Injury Settlements Work

The settlement process overview

Most personal injury cases — roughly 95% — settle before trial. Understanding each stage helps you make informed decisions about when to accept an offer and when to push for more.

Stage 1: Medical treatment and documentation

Before any settlement discussion begins, you must complete — or reach maximum medical improvement (MMI) in — your medical treatment. Settling before MMI is a critical mistake: once you sign a release, you cannot reopen the claim if your condition worsens. Document every medical visit, prescription, and therapy session.

Stage 2: The demand letter

Once you have reached MMI, your attorney sends a demand letter to the at-fault party's insurer. The demand letter summarizes the accident, your injuries, your medical expenses, lost wages, and pain and suffering, and states the amount you are seeking.

Stage 3: Negotiation

The insurer will respond with a counteroffer, typically far below your demand. Multiple rounds of negotiation are normal. Your attorney will advise you on whether each offer is reasonable based on the strength of your case and comparable verdicts in your jurisdiction.

Stage 4: Settlement agreement and release

When both parties agree on a number, you sign a settlement agreement and release. The release permanently waives your right to sue for this incident. Once signed, the insurer typically issues payment within 30 days.