Bodily Injury Claim Settlement after automobile accident?

Question

My wife was in a car accident several months ago and a couple of our children were in the car with her. One of them (who happens to be two years old) saw a doctor and our insurance agency has been wanting us to do a settlement for $500 (we think he's likely fine).

I am unfamiliar with the ins and outs of this. My concern is that

1. If I accept the settlement and later it turns out that he is hurt in some way (maybe a chronic condition) that he is unable to communicate to us we will have no recourse.
2. If we don't accept the settlement, that we won't be able to approach them later if he does have some injury (I do not know if there is a time limit for claiming bodily injury after an accident).

Could someone please clear up my concerns:

• In typical settlement agreements, if later medical expenses are incurred due to some unknown condition, is there any recourse?

• Is there something akin to a statute of limitations with regard to how much time a person has to file a claim with regard to an injury (if it was not known at the time)?

We already have filed a claim (to pay for the doctor visit after the accident), which is why they want us to settle.

Answer 1

Your questions would be answered by the terms of the settlement and by your insurance contract. If you are unsure of the implications of those contracts you should have them reviewed by a lawyer or competent agent that you pay (i.e., not one representing the insurer) to answer your questions.

In general, however, settlements involve a full release of future claims against the settled matter. That doesn't necessarily mean that they are bad: A fair settlement pays the present risk-adjusted cost of future liabilities. But since that's the whole reason people buy insurance to begin with I would be wary of accepting a small settlement from an insurance company. I.e., you pay small premiums to insurers for coverage against unlikely but catastrophic expenses. E.g., maybe you pay $500 a year to insure a house against the unlikely but catastrophic scenario that it burns down and has to be replaced for $250k.

If an insurer asked to pay me $500 so that they aren't on the hook for unlikely but expensive costs down the road I would ask myself, "Do I want to sell insurance to this insurance company?" If I had better information than them and knew that there was zero risk I probably would. But if they had more experience than I with the risks and costs involved in the situation then I likely would not, even if I knew that they had priced the settlement fairly (which is another risk and a whole other question of negotiation and game theory).