Downside to proposing settlement offer to avoid litigation? Laura K Martin asked 1 week ago
Downside to proposing settlement offer to avoid litigation?

We are at a standstill with insurance regarding abatement of our HVAC system and related repairs for Smoke Damage. We have a test report showing high HVAC lead contamination, recommendations for replacement, and an estimate has been submitted. We are close to hiring a lawyer to move the needle, but want to try to propose a settlement to walk away and close the claim with 80% or so and avoid paying a lawyer’s fee on the whole thing. Is there a downside if we proceed to litigation after making this settlement proposal if it doesn’t work? We are in California.

We don’t know what we don’t know. If insurance takes the deal, we would certainly have a lawyer review any release before we sign away our rights, but what else should we consider?

1 Answers
Brad Deutch Brad Deutch Expert answered 3 days ago
0 Vote Up Vote Down

Laura,
In general, there is not necessarily a downside to attempting a reasonable settlement before filing a lawsuit. In some situations, it may actually help show that you made a good-faith effort to resolve the dispute before pursuing litigation.
However, there are several important things to consider before agreeing to any settlement:
1) Be cautious about signing a release. Insurance companies often require policyholders to waive future rights in exchange for payment. You want to make sure you are not giving up the ability to seek additional compensation if more smoke contamination or damage is discovered later.
2) Smoke damage and HVAC contamination issues can evolve over time. Before settling, make sure you understand the full scope of damage and repair or replacement costs.
3) Keep thorough documentation, including:
-environmental testing results,
-contractor and HVAC estimates,
-photos,
-emails and letters with the insurer, and
-timelines of delays or disputes.
4) If the settlement discussions fail, a reasonable settlement proposal generally should not prevent you from pursuing litigation later.
Before signing any settlement agreement, it is a good idea to have a qualified California policyholder attorney review the release language and your overall claim position.
You may also find these UP resources helpful on smoke damage and claim dispute resolution techniques
Good luck, Brad