A claim settlement is an agreement between two or more parties to settle a legal claim with payment and other terms. Claim settlements can come up in a number of legal contexts. It is important to be aware that settling a claim usually also eliminates the right to make future claims about the legal matter in the future. If people are not satisfied with the terms of a settlement, they should renegotiate, rather than accepting and resolving to pursue the matter further at a later date.
One of the most common forms of claim settlement involves an insurance claim. When people make claims against an insurance policy, the company reviews the claim, determines if it is covered, and offers a settlement to pay the claim. Sometimes this is a straightforward process, as when someone with complete prescription coverage has prescriptions paid for by the insurance company. In other cases, people may dispute the circumstances or amount of the claim and the case may end up in court.
Legal cases where people are filing for civil damages are resolved with claim settlements as well. Sometimes the defendant may offer to settle before the case goes to court, a situation commonly seen when the defendant believes that going to court could result in a costly award or could create negative publicity. In other instances, a settlement is reached during court proceedings, with a judge or jury awarding damages to the plaintiff and the defendant being ordered to pay them.
The terms of a claim settlement can vary and both parties are usually required to abide by certain terms. The party paying out is required to pay out in full within a set time limit. The party receiving a payment may be required to waive future claims about the matter and to indicate acceptance of the settlement. Other terms may be attached to the agreement, depending on the case.
People who are unfamiliar with the legal system should be aware that a claim settlement can be used abusively. Before signing documents associated with a settlement, the documents should be carefully reviewed and if the terms are not understandable, an attorney should be asked for clarification. People may be encouraged to settle out of court or to settle immediately and in the process they may give up future legal rights and end up with less money than they are entitled to. Pro bono legal clinics can provide advice to people involved in a claim settlement who cannot afford to consult an attorney.