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What Should I Do With My Settlement Check Money?

What will you do with the money from your settlement check if you’re injured in an accident and receive money from a personal injury settlement? Many of our clients bought their dream house!

Nyda Bought Her New Dream House With Her Personal Injury Settlement Money!

 

The Time to Start Thinking about Your Settlement Check Is Immediately After You’re Injured in an Accident

Most people think about their settlement check after their personal injury case is settled, but the time to start thinking about your settlement check is immediately after you’re injured in an accident.

You can start by reading this entire article.

The first thing to think about is don’t tell your family and friends anything about what you are doing with regard to a lawsuit. When friends and family advise you to call a lawyer, just say, “Thank you, I’ve got it handled.” I’ll explain why later in this article.

Learn About How to Invest a Large Sum of Money

For most people injured in an accident, the first time they will see a large sum of money is from a personal injury settlement.

Because money from a personal injury settlement is usually tax-free, a $1,500,000 settlement that gives you $1,000,000 after legal fees or a $750,000 settlement that gives you $500,000 after legal fees is a lot of money to get all at once.

When earning $60,000 or even $150,000 per year before income taxes, your tax-free settlement seems like free money you can spend on whatever you want. That’s a feeling you need to ignore.

We had a client who went on a costly vacation for a month, but when they came back, it was just a memory. They still had plenty of money left from their settlement, but it would have been better to invest it.

Don’t Spend Your Settlement Money

We have had clients who spent their entire $1,000,0000 personal injury settlement money in only one to two years. It’s amazing how fast a large lump sum of money can disappear between buying a few things and some good-meaning friends and relatives.

One important thing most people don’t know about spending money is what it costs to keep the item you buy.

Buy a boat for $500,000, and you’ll find it will cost you 15% or $75,000 per year to keep. I know. I had a 37ft sailboat. And then there are the times when you’ll need more money, like when I lost the use of my boat for an entire summer while the fuel tank was being replaced at a cost of $28,000, and that was in 1988.

You might want to buy a fancy sports car, but you must consider the cost of insurance, parking, maintenance, repairs, and depreciation.

If you get a loan to buy something like a car, motorcycle, boat, or house, you must also consider the interest cost.

According to AAA, “the average yearly cost to own and operate a new vehicle in 2022 is $10,728, or $894 per month.” Costs and interest are considerably higher now.

How Long Does It Take To Spend Your Personal Injury Settlement Money?

How long does it take to spend your personal injury settlement money until it’s gone and you’re back to where you were before your settlement?

We estimate, on average, personal injury clients who don’t invest their settlement money spend all of it in 1-3 years.

So, how can you keep your settlement money and live the life you want? Keep reading below.

When You Get a Personal Injury Settlement, You’ll Have a Lot of Friends

This is why you should never discuss your personal injury case with your friends or family.

When you get a personal injury settlement, friends and relatives come out of the woodwork. You make like being popular, but your popularity isn’t real.

When you get your settlement check, all your friends and family will need just a little money, and they will swear they will pay you back. You’ll want to help because you’re a nice person.

You may even be told that they’ll pay you interest, which will save them money because they can’t get a loan from a bank, and payday loans are illegal in New York.

Since you didn’t own a bank before, why start one now? Your settlement check is never enough to compensate you for your injury, and you need to protect your money.

If you want to loan money to a friend or relative, give them the money as a gift because you will never get it back, and if you expect to get paid back, your relationship will be over.

What to Tell Your Friends and Family About Your Personal Injury Settlement

We recommend that you don’t tell anyone about your personal injury settlement, not even your kids or your parents.

But what should you say if your friends or family already know about your personal injury settlement? If they ask, just tell them your personal injury settlement was deposited in a trust, and you can’t withdraw money from it.

Our Client Got Scammed Out of Her Personal Injury Settlement

We have a client in the Bronx who lost her entire $1,000,0000 settlement within an hour of getting her personal injury settlement check because she didn’t listen to us.

Her son wanted to borrow $100,000 for his successful business, and she wanted to help him because she’s a good mother. The offer of a high-interest rate return on money also helped to lure her into the scam.

I warned her, but she didn’t listen to me, and the CFO of his business scammed her out of her entire settlement.

How She Got Scammed Out of Her Settlement Money

Because they needed the money quickly, the CFO of her son’s company asked her to deposit her entire settlement check in his account. He said this would be faster since they would not have to wait for the check to clear her account.

The business gave her a promissory note to borrow $100,000, and the CFO would return the rest of the money to her. But after he got her settlement check in his account, he never gave any of her money back to her, and she never saw it again.

She went to the District Attorney in Rockland County, where he lives, and in Nassau County, where the crime occurred, but both District Attorneys refused to prosecute because she gave him the money. She then got a lawyer to sue him, but that cost her more money, and she never got any money back.

We now represent her for a much bigger case, and she promised to listen to me this time to invest and protect her settlement money.

How Someone Lost All Their Settlement Money in One Day

My wife told me about someone at work who received a $100,000 personal injury settlement and lost it in one day. My wife’s friend had a different personal injury settlement lawyer and was not our client.

My wife said her friend went to a casino and lost her personal injury settlement in one day!

Do These Three Things After You Receive a Personal Injury Settlement Check

  1. Don’t tell any friends or family about your personal injury settlement.
  2. Deposit your personal injury settlement check in an interest-bearing account and keep it there while you consider what to do with your money. I have listed some high-interest-bearing accounts below.
  3. Call an accountant to discuss what to do with your personal injury settlement (preferably do this before you get your personal injury settlement check).

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The Secret of How the Rich Get Rich

The secret the rich have to get and stay rich is to conserve capital (money).

Instead of spending money, the rich invest their money in financial vehicles that will keep their money safe and make more money they can reinvest or spend.

The Secret to Using Your Settlement Money to Get Rich

Don’t spend the settlement money from your personal injury case. It can be spent rather quickly and leave you poor again. Instead, invest your settlement money to build wealth or provide an income.

You can invest your settlement money in a house, other real estate, or the stock market.

How Can I Protect My Settlement Money So I Don’t Lose It?

You can ask your lawyer to deposit your settlement check money in a structured settlement.

A structured settlement is an annuity invested with an insurance company that will pay you monthly payments with interest that are free from income tax (see below).

Where Can I Put My Settlement Money Temporarily?

While trying to decide how to invest your personal injury settlement, deposit your money in a safe account where it’s earning interest and is liquid so it’s instantly available when you decide what you want to do.

There are online savings accounts that are FDIC insured that pay significantly more interest than physical walk-in banks.

I have used two online FDIC-insured banks: ufbdirect.com and newtekbank.com.

Q: How do I find out if a bank is FDIC-insured? A: To determine if a bank is FDIC-insured, ask a bank representative, look for the FDIC sign at your bank, call the FDIC at 877-275-3342, or use the FDIC’s BankFind tool.

You can open a mutual fund at Vanguard. Vanguard has several low-risk mutual funds to keep your money: VMRXX, VMFXX, VUSXX, and VYFXX (VYFXX is tax-free for New York residents).

(VMRXX) is invested in U.S. debt, which pays a high rate of interest. Approximately half of the interest earned may be partially tax-free for New York residents. $500,000 deposited in VMRXX currently pays a 5.31% rate with interest of $26,550 annually.

Use Your Settlement Money to Buy a House or Apartment

We have had clients who listened to us and invested their settlement money in a house or commercial real estate. They have done very well with their investment, while some other clients blew through their settlement money quickly.

Investing in real estate, whether you buy a house or apartment to live in or for rental income, is probably the best investment for personal injury clients.

Our clients are usually not knowledgeable about the stock market and do not have the patience to stick it out when the stock market is not doing well.

Use Your Settlement Money to Buy a House or Apartment to Live

When you use your settlement money instead of a mortgage to buy a house, townhouse, or apartment to live in, you’ll save a lot of money on rent. Rent increases forever, and when you get older and can’t work, you won’t be able to pay rent.

You can buy a condo or house for all cash with your settlement money and live rent-free. Many of our personal injury settlements are enough to buy a house or condo apartment in New York. In fact, several of our clients have bought a house or condo in New York.

But you can buy a house or condo outside of New York for much less money, and several of our clients have done that.

I’ve been looking to buy an apartment on the beach in Southeast Florida, from Miami to north of Boca. I’m looking for a place to spend a month or two around January-February. But your personal injury settlement can let you live all year long in a gorgeous oceanfront apartment.

I’ve been looking at two and three-bedroom apartments with a direct ocean view, but many of our personal injury clients get enough settlement money to buy a two-bedroom apartment with a partial ocean view. I’ve seen many of these apartments sell for $400,000-$600,000. Facing inland but still on the beach or across the street, they can be even cheaper with low fees and taxes.

Use Your Settlement Money to Buy a House or Apartment for Investment

You can buy an apartment with the settlement money from your personal injury case and rent the apartment.

There are four ways you can make money from using your settlement money to invest in a house or apartment:

  1. If you rent a fully paid apartment, you’ll get instant cash flow with monthly rental income.
  2. You’ll get the potential appreciation in the value of the property value over the years in which you own it.
  3. If you pay enough down payment to create a positive cash flow, you will get monthly rental income while your tenant pays off your mortgage, and your apartment appreciates in value.
  4. There are substantial tax benefits when investing in rental properties.

If you’re interested in using your personal injury settlement money to invest in rental property, you may want to download a rental property analysis spreadsheet from Stessa.com.

You can also find interesting articles about rental property investments and free rental property management software at Stessa.com.

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Some of Our Clients Who Bought a House With Their Settlement Money

Nyda Bought a Townhouse on the Hudson River With Amazing Views

Nyda used her personal injury settlement money to buy this townhouse condo in Westchester, NY, on the Hudson River with amazing views.

house bought with settlement money

These are the amazing views of the Hudson River from the back windows and balcony of her house.

The view from the apartment our client purchased with her settlement

At 5 am

view of the Hudson River at 5am from the house bought with a personal injury settlement

Steve Bought a Commercial Building in Long Island City, Queens

When Steve’s personal injury case was settled, he complained that his landlord raised the rent for his business. I told him to fire his landlord and buy a building with his settlement money.

Steve bought a commercial building in Long Island City, Queens, NY. He’s now retired, and he rented his building. He gets a nice check every month for a building that is worth several times more than he paid. Now, he spends summers on Long Island and winters in a house he bought in Florida.

John Bought a House in Rockland

John V. had a car accident. When I met John, he told me that he had a lawyer who wanted to settle his case for $75,000 and that there was a $300,000 insurance policy. He asked me what I thought, and I told him I could get him the entire $300,000.

After I took over his case, I settled it for $310,000, and John bought a house in Rockland County with his money.

Kevin Bought a House in Suffolk

Kevin had a torn meniscus in his knee. He bought a house in Suffolk County, Long Island, after a jury trial verdict of $465,000.

Rich Bought a House in Suffolk

Another client got a jury trial verdict of $1,000,000 and bought a house in Suffolk County, Long Island.

Donna Bought a Brand-New House

After Donna’s motorcycle accident, we got her teeth fixed, and after her settlement, she bought a brand-new house in South Carolina. Donna thinks we’re the best motorcycle accident lawyers in New York.

Donna's house that she bought after her motorcycle accident settlement

Can You Buy a House With Your Settlement Money?

Many of our clients get enough money from their settlement to pay for a house without a mortgage. If you have one of these injuries from an accident, you may also be able to buy a house.

Don’t forget. Personal injury settlements are almost always income tax-free.

See some examples of personal injury cases we settled to get an estimate of how much money you could get from your personal injury settlement.

Invest Your Settlement Money in the Stock Market

If you don’t want to invest your settlement in a house, you can invest it in the stock market or a mutual fund. Just do it wisely.

Things to keep in mind about investing your settlement in the stock market:

  • The stock market should only be used if you can keep your money invested for a long time. It is often recommended for a minimum of five years, but I recommend up to 12 years because the stock market may go down and take a few years to go back up.
  • Only invest in major companies.

I like tech companies because I think the future will be based on tech and Artificial Intelligence. If you want to know what the future will bring, watch science fiction movies because everything you see will become reality.

One of my favorite companies to recommend is Microsoft because it is a highly successful tech company, and its stock pays a small dividend. I am heavily invested in Microsoft, Meta, Google, and Tesla. All of these companies are heavily invested in Artificial Intelligence.

You can start learning about stocks and mutual funds at Schwab and Vanguard.

This is an interesting video about what to expect and do when investing in the stock market.

Should You Invest Your Settlement Money All at Once?

Northwestern Mutual study found that a lump-sum investment outperformed dollar cost averaging 75% of the time. Dollar-cost averaging is when you buy shares of stock in small amounts at regular intervals, regardless of price, so you get an average price.

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Structured Settlement

A structured settlement is great for people who will get a large personal injury settlement because you won’t have to learn anything about investing or managing your investment. You’ll just get a check every month for life if that’s what you want.

What is a structured settlement? A structured settlement invests your settlement in an annuity invested with an insurance company that pays you money tax-free every month.

Structured settlement payments can be for a certain number of years or for life and can increase monthly payments to compensate for inflation. There are many ways that a structured settlement can be designed, but that is a topic for another article.

One advantage of a structured settlement is that the interest you earn in the annuity is tax-free income to you because it is part of your personal injury settlement.

Another advantage of a structured settlement is that you can receive an amount of money every month that you can use to pay bills, rent, mortgage payments, car payments, and/or anything else without worrying that you will spend your entire settlement quickly.

Another advantage of a structured settlement is that you won’t be able to loan large amounts of money to your family and friends, who will never pay you back.

Be aware that your personal injury lawyer must set up a structured settlement before you sign a personal injury settlement release. Your lawyer must also deposit your settlement check in the trust.

You cannot set up a structured settlement after you have already deposited your settlement check in your bank account. If you deposit your settlement check in your account, you cannot give it back to your lawyer to deposit in a trust.

Never sell your structured settlement to a company that buys them unless you are terminally ill. If you sell your structured settlement, you will get far less than you would have received if you took your settlement when your case was settled. Companies that buy structured settlements take advantage of injured victims and make a lot of money on what you would have received.

Is It Safe to Deposit a Settlement Check?

It is not safe for you to deposit your settlement check:

  1. If your health insurance paid for your medical treatment and your health insurance plan is an ERISA plan or an ERISA-regulated plan. If you get health insurance from an employer that has 50 or more employees, you likely have an ERISA plan or an ERISA-regulated plan. Your health insurance will have a lien on your settlement, and your lawyer must resolve it before you deposit your settlement check.
  2. If you receive public benefits. You will have a lien on your settlement, and your lawyer must resolve it or deposit your settlement check in a trust. If you deposit your settlement check in your account, you could lose your benefits for the period of time that you have too much money in your account.

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Should You Spend or Invest Your Settlement Money?

Some considerations to determine whether you should spend or invest your settlement money:

  • Your age.
  • Whether you want to invest your settlement money for income or a house or apartment to live in.
  • Whether you are receiving public benefits, such as Medicaid, SNAP (food stamps), or housing.
  • Whether you want to leave your money for someone else.
  • The amount of your personal injury settlement.

If you’re younger, you should strongly consider investing your settlement money in real estate or the stock market.

If you estimate your life span is less than 20 years, you might consider spending your settlement money while you can enjoy it. But if you want to leave your money for a relative, you can buy a house and leave the house for your relative or invest your money, spend the income and maybe some of the principal, leaving the remainder for your relative.

If you receive public benefits and your settlement is less than $30,000, you can have your lawyer deposit your settlement check into a Pool Trust, from which you can spend it without losing your public benefits.

Your lawyer can deposit a settlement check of any amount into a Pool Trust, but it is more difficult for you to spend your money from a Pool Trust than a Special Needs Trust. A Pool Trust can be opened for a few hundred dollars, while a Special Needs Trust can cost several thousand dollars.

If you receive public benefits and you receive a large settlement, you can either decide to stop receiving public benefits and invest your settlement or have your lawyer deposit your settlement into a Special Needs Trust from which you can spend it without losing your public benefits.

Money in a Special Needs Trust can be spent and/or invested. Your Special Needs Trust can invest in stocks or own an apartment or house.

If you receive a large settlement and have enough years to invest the money, you should decide how to invest it, not spend it.

If you’re looking for software that can help you with financial planning and retirement planning to help you decide what to do with your personal injury settlement, take a look at the following:

Should You Use a Settlement Check to Pay off Credit Cards?

A quick search on Google shows that many lawyers recommend that you use your settlement check to pay off credit cards and other debt. But will paying credit cards, high-interest loans, or other bills really get you financial freedom?

When I started my personal injury law practice, I cleaned up credit reports for doctors and stock brokers who were high-income earners. Deciding what to do requires information about your personal situation, so it’s not something that can be answered on a website. A blanket statement advising you to use your settlement check to pay off credit cards and other debt is wrong.

Before you plan to pay off debt and before you get your settlement check, you should discuss this with a lawyer or accountant. You may be able to get rid of your debt or settle it for a small amount.

Please note that I cannot provide a consultation regarding your settlement check if another lawyer is handling your case or settled your case.

Where to Get Advice About Your Settlement Money

You should discuss any settlement with your personal injury lawyer before you sign a release, especially if you are receiving or ever received public benefits.

If you will receive a gross personal injury settlement of $100,000 or more, you should find an accountant to consult with. In New York, a gross personal injury settlement of $100,000 should give you $66,666.66 after legal fees are deducted and before case expenses, medical liens, and public benefits liens are deducted. Use our calculator to find out how much money you will get from a personal injury settlement.

We can recommend an accountant and a real estate attorney in New York.

Please note that I cannot provide a consultation regarding your settlement check if another lawyer is handling your case or settled your case.

When to Get Advice About Your Settlement Money

Be aware that a trust or a structured settlement must be set up by your personal injury lawyer prior to you signing a release.

If you receive public benefits, you must discuss your settlement with your personal injury lawyer before you sign a release. Do not deposit your settlement check unless you discuss your public benefits with your personal injury lawyer.

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Phil Franckel is a well-known personal injury lawyer in New York since 1989. He is a Founding Partner of 1-800-HURT-911, LLP®, the Personal Injury Dream Team™, and a former Member of the Board of Directors of the New York State Trial Lawyers Association. He has an Avvo Top 10  Rating, Avvo Client’s Choice Award with all 5-star reviews, Avvo Top Contributor Award, Multi-Million Dollar Trial Lawyers Award, and others. See Mr. Franckel’s bio for areas of expertise.

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So, what do you want to do with your settlement money? Leave a Comment!

Should I Sue the Other Driver or Use My Own Insurance? 2024

Should I sue the other driver or use my own insurance if I had a car accident that was not my fault and only had a fender bender with minor damage to my car when there was no injury?

The manager of a body shop asked me that question and also asked what the difference is if their customers use their own collision insurance or sue the other driver who was at fault for a car accident with collision damage when there are no injuries.

Short answer: If you have collision coverage on your auto insurance policy, I recommend using your collision coverage to repair your car rather than going directly to the other car’s insurance company. It will save you a lot of time, effort, and aggravation and could save you a lot of money.

Important Note: Your insurance company has many legal obligations to you, both by law and contract, because you paid for your insurance coverage. The insurance company for the other car in a car accident has no legal obligation to you. Your insurance company will not make you sign a release, but the insurance company for the other car will.

Note: We cannot represent you for collision damage if you were not injured. If you were injured in a car accident in New York, we can help you for free with your collision damage claim.

Tip: Always get a police report when you have a car accident. Take photos of everything. Get the insurance information for the other car. If the driver of the other car says there’s no need to call the police and he or she will pay you directly instead of going through insurance, do not believe it!

Tip: Bring your car to your body shop before calling your insurance or the other driver’s insurance company. Many body shops will handle your insurance claim, so you don’t have to. Do not use an insurance photo collision estimate app, and do not let the insurance company look at your car anywhere other than at your body shop.

An image of a woman clenching her fists and grimacing with her eyes wide open, worried about making a claim on her collision coverage. She's asking, "Will My Insurance Premium Go Up if I File a Claim Against My Own Insurance?" The image shows the 1-800-HURT-911® trademark.

I don’t want my insurance to go up! Should I sue the other driver? Why should I use my own insurance?

Will My Insurance Premium Go Up if I File a Claim Against My Own Insurance?

If you have collision insurance coverage, you may be worried that your insurance premium will go up if you file a claim against your own collision insurance. However, that will not always happen, and I’ll explain below how your insurance premium can go up because of a car accident, even if you don’t make a claim.

Any claim filed because of a car accident can cause your insurance premium to increase, but not necessarily. For instance, some insurance companies guarantee they won’t increase your premium for your first accident.

If the accident was obviously 100% the fault of the other driver, such as if you were hit in the rear, then filing a claim with your collision damage coverage should not affect your insurance premium. Your insurance company should get back all the money they paid you and get your deductible paid from the other driver’s insurance company.

When Can I Sue the Other Driver for My Car Accident Damage?

You can go against the other car’s insurance if you are sure you are not injured and there is very little damage like this minor fender bender ding from a parking lot accident.

See what to do after an accident and what NOT to do after an accident.

Photo of damage on the front bumper caused by a minor car accident in a parking lot that did not cause an injury. Should you sue the other driver or use your own insurance?

Should you sue the other driver or use your own insurance if you have a ding or damage on your car like this, but no one was injured?

If it’s been a few days since your car accident and you don’t think you’re injured, but you have any knee pain, shoulder pain, jaw pain, or headaches, call a personal injury lawyer. It can take 6-8 weeks or more before you find out if you have a serious injury requiring surgery. If we are your personal injury lawyers, we can also handle your collision damage claim for free.

Factors That Can Trigger a Premium Increase

Several factors can cause an increase in your insurance premium because of a car accident. There may be several different insurance claims for one car accident.

If one of those factors or insurance claims causes your insurance premium to increase, then additional factors or claims will have no additional effect on your premium, even if you file a collision claim with your insurance company.

If You or Anyone in Your Car Went to a Hospital ER or Saw a Doctor

If anyone in your car is injured, New York State law requires that a No-Fault claim be filed.

Don’t think you won’t file a No-Fault claim and submit your medical bills to your health insurance company so your premium isn’t increased. Your health insurance company may seek reimbursement from you when it finds out you were injured in a car accident. A No-Fault claim may also be filed by the hospital, ambulance, and doctors so they can be paid for your medical treatment.

If a No-Fault claim is filed, your car insurance premium could be increased, but not necessarily. If your premium is increased because of a No-Fault claim, filing a collision damage claim to pay for the damage to your car will have no effect on your insurance premium.

I had a car accident when I was stopped at a red light and hit in the rear by a drunk driver who was arrested at the scene of the car accident and later convicted. I had a back injury and went to the hospital ER. I also saw a doctor for three or four months. My car was totaled, and my insurance company, Liberty Mutual, recovered the money for the car and the deductible from the other driver’s insurance. But my premium was increased because of the No-Fault claim.

If the Other Driver Files a Claim Against Their Own Collision Damage Coverage

If the other driver files a claim against their own collision damage coverage, their insurance company may file a claim with your insurance company to recoup what they paid for collision damage.

If that happens, your insurance company may increase your premium, so you might as well use your own collision coverage because your premium won’t increase any further.

If Anyone in Any Car, Other than You, Was Injured

If anyone is injured and files a claim against you, your insurance premium may be increased, so you might as well use your own collision coverage because that won’t increase your premium any further.

Claims History and Other Factors

Allstate once made me assigned risk because they said I had five claims in 40 months. The claims were three broken windshields (two from stone strikes and one from a snowstorm), a stolen and recovered car, and an accident they said was 50% my fault. Read about what you should know before replacing a broken windshield.

I always pay my premium on time, but if you pay it late too many times, that can increase your premium.

Your age, where you live, your credit rating, and other factors can have an effect on your insurance premium.

Even if No Claim Is Filed With Your Insurance

Even if you don’t file a claim with your insurance, the other car’s insurance doesn’t file a claim with your insurance, and no one else does, your insurance company could still find out about your accident and increase your premium if a police report was made.

Insurance companies usually search for police reports. If a police report was made, it must be filed with the New York State Department of Motor Vehicles. Your insurance company will find the police report for your car accident when it searches the NYS DMV database for police reports.

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Factors to Consider Whether You Should Sue the Other Driver or Use Your Own Insurance

Whether you should sue the other at-fault driver or use your own collision insurance will depend on the following:

  1. If you have any pain or injury.
  2. If you went to the hospital ER or saw a doctor after your car accident.
  3. If anyone else was injured in the car accident or you receive a letter from a lawyer.
  4. The amount of fault of the other driver.
  5. The extent of the damage to your car.
  6. The insurance coverage of the other driver’s car.
  7. The insurance company the other car has (some insurance companies are very difficult to deal with).
  8. Your insurance history for the last 40 months. Factors such as whether you had any traffic convictions or insurance claims or paid your premiums on time can affect your premium.
  9. If you have coverage for a rental car or can get a rental paid for by the other car’s insurance company.
  10. Your insurance company will not require you to sign a release.
  11. The amount you value your time and effort.

If You Have Any Pain or Injury

If you have an injury, call a car accident lawyer in New York immediately. If you don’t have an obvious injury, but you have some pain in your neck, back, shoulder, knee, or anywhere else, you should also call a car accident lawyer immediately.

You should know that frequently, people have pain in their neck, back, shoulder, or knee and find out weeks after the car accident that the pain was due to a serious injury, often requiring surgery.

If you are injured or in pain and we represent you for your car accident, we can advise you whether you should use your own collision insurance. If you decide to sue the other driver for your collision damage, we can include that in your lawsuit, and we will not charge you a legal fee for the money we collect for your collision damage.

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If You Went to the Hospital ER or Saw a Doctor After Your Car Accident

If you went to the hospital emergency room, urgent care, or saw a doctor because of your car accident, New York State law requires that the bill be submitted to your No-Fault insurance company, which is the insurance company for your car.

That means you will have a No-Fault claim, and your car insurance premium could be increased.

If Anyone Else in the Car Accident Has Any Pain or Injury

If anyone in any of the cars in the accident was injured or has any pain, you will very likely receive a claim letter from their lawyer, and a lawsuit may be filed against you, even if you think the car accident wasn’t your fault.

You may think that no one was injured in the other car, but very often, people don’t even know they have a serious injury until a day or even weeks after the car accident. Even a broken bone may be discovered a day or two after the car accident, and frequently, people find out months later that they need surgery.

If you receive a letter from a lawyer, the lawyer will also send a copy of the claim letter to your insurance company. Still, you should immediately contact your insurance company. Read about when you need a lawyer if you are being sued for an accident.

The Fault of the Other Driver

Even if you think the other driver is at fault for causing the car accident, that driver’s insurance company may not agree.

If the other driver’s insurance company does not agree that their driver was 100% at fault for causing your car accident, the driver’s insurance company will not pay you 100% of your damages if you don’t have a lawyer.

You will usually get the agreement of the other driver’s insurance company when:

  • You were hit in the rear
  • The police report shows the other driver ran a red light
  • The police report shows the other driver ran a stop sign
  • The other driver was drag racing when your car was hit or
  • Your car was parked when it was hit.

An example of how the other driver’s insurance company is not always agreeable is when a friend called me with a problem. He had a brand new $80,000 BMW that was hit by a car when his BMW was legally parked.

My friend didn’t have collision coverage on his insurance policy, so he tried to get the other car’s insurance to pay for the damage. But the other car’s insurance wouldn’t offer enough money to replace the car, which was totaled, even though it was parked when it was hit.

I had to represent my friend to get his car replaced.

How Much Damage Your Car Has

If your car only has a small amount of damage, the other driver is 100% at fault, and you are sure that no one was injured, you could try to have the other driver’s insurance pay for your damage.

The Insurance Coverage of the Other Driver’s Car

The at-fault car in a car accident may have minimum liability coverage for property damage, which may not be enough to cover the damage to your car. The minimum liability coverage for property damage in New York State is only $10,000.

If your damage is more than what the at-fault car is insured for, you must file a collision damage claim with your own collision coverage insurance.

If the at-fault car in a car accident is uninsured, you must file a collision damage claim with your own collision coverage insurance. If the at-fault car was stolen, the insurance coverage will not cover the stolen car, and you will have to file a collision damage claim with your own collision coverage insurance.

The Insurance Company of the Other Car

If a major insurance company insures the at-fault car in a car accident, you will have an easier time. But if the at-fault car is insured by an insurance company you haven’t heard of, like American Transit, you will never get paid, so you should file a collision damage claim with your own collision coverage insurance.

A friend’s car was parked when hit by a taxi insured by American Transit. My friend asked me for advice, and I told him to file a claim with his own collision coverage insurance. But he was afraid his insurance premium would go up, so he filed a claim with American Transit.

After six months of American Transit not paying him, he gave up and filed a claim with his own collision coverage insurance.

Your Insurance History

Insurance companies look at the last 40 months of your insurance history, which includes a variety of factors, such as whether you had any traffic convictions or claims, paid your premiums on time, credit history, and other factors.

All of these factors will determine whether your insurance company will raise your insurance premium.

If You Have Rental Car Coverage

You may need a car while your car is in the body shop being repaired. If your car is totaled, you will need time to find a replacement car.

If you have car rental coverage, your car rental coverage will pay for a rental car.

Tip: Be sure to tell the car rental agency that your car is in the body shop or was totaled because you will get a much better rate. Better yet, ask your body shop if they can help you get a rental car.

The other car’s insurance may pay for a rental car, but they don’t have to and won’t pay 100% if the claim rep thinks it was partly your fault.

Signing a Release

If you have collision damage coverage, your insurance company will not require you to sign a release.

If you file a lawsuit against the other driver, that driver’s insurance company will require you to sign a release before they will issue a settlement check to you. Find out if you can accept an insurance settlement check for collision damage to your car.

Do not sign a release that includes injuries. The release will prevent you from getting more money if you find further damage to your car. Body shops frequently find more damage after they begin working on your car.

How Much Do You Value Your Time?

You may spend a lot of time and aggravation trying to get the other car’s insurance to pay for the damage to your car and your rental car.

Suing the other driver can be a lengthy and complicated process, requiring a lot of your time and effort and causing frustration. Using your own insurance is usually the best option. You paid money for collision coverage, which will make your life easier. Why not use your collision coverage?

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How to File a Claim Against the Other Driver’s Insurance

Get a copy of the police report. See how to get a copy of the police report in New York. On the police report, you will see a three-digit code for the other car’s insurance company. To find the name of the car’s insurance company, enter the insurance company code at this link on the New York Insurance Department website.

Who Do I Sue, the Driver or the Insurance Company?

You can’t sue the insurance company. You must file a lawsuit against the car’s owner and driver. Their insurance company will defend the lawsuit and pay any settlement or judgment.

However, you can start by filing a claim, not a lawsuit. If the other car’s insurance company won’t pay you, you don’t have collision coverage, and you are not injured, you can file a lawsuit.

A lawsuit can be filed in Small Claims Court in New York City for up to $10,000, up to $5,000 in Nassau County or Suffolk County, and up to $3,000 in other New York Counties such as Rockland County.

If your damage is more than the amount allowed in the Small Claims Court, you can file a lawsuit in Civil Court in New York City or District Court anywhere else in New York.

Can I File a Lawsuit Where I Live?

You can file a lawsuit in Small Claims Court only in the county where the defendant resides.

If you file a lawsuit in any of the other courts in New York, you can file a lawsuit in the county where you reside, where the defendant resides, or where the accident occurred.

What Should I Do If I Have a Car Accident With An Uninsured Driver?

If you’re not injured and the only damage is to your car, you need to file a claim with your insurance company for collision damage.

If you did not buy collision damage coverage, you are the insurer, and you will have to seek payment for your loss by the uninsured driver or pay out of your pocket.

You can file a lawsuit against the uninsured owner and driver in Small Claims Court.

If the damage is much more than the jurisdiction of the Small Claims Court, you can file a lawsuit in the New York State District Court or the Civil Court in New York City.

If the damage is much more than the jurisdiction of the District or Civil Courts, you can file a lawsuit in the New York State Supreme Court.

If you’re injured and your car accident occurred in New York, you need to contact a car accident lawyer in New York immediately. In New York State, you usually have only 90 days to file an uninsured claim, and everyone in New York has uninsured coverage.

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Phil Franckel is a well-known personal injury lawyer in New York since 1989. He is a Founding Partner of 1-800-HURT-911, LLP®, the Personal Injury Dream Team™, and a former Member of the Board of Directors of the New York State Trial Lawyers Association. He has an Avvo Top 10  Rating, Avvo Client’s Choice Award with all 5-star reviews, Avvo Top Contributor Award, Multi-Million Dollar Trial Lawyers Award, and others. See Mr. Franckel’s bio for areas of expertise.


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Philip L. Franckel, Esq. is one of the HURT911® Dream Team™ Founding Partners at 1-800-HURT-911® New York; He has a 10 Avvo rating; Avvo Client’s Choice with all 5-star reviews; Avvo Top Contributor; and a former Member of the Board of Directors of the New York State Trial Lawyers Association.

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