How Do Car Accident Settlements Work? From the Claim to the Check, Step by Step

A car accident settlement is a trade: the at-fault driver’s insurer pays an agreed amount, and you sign a release giving up further claims over that crash. It moves from claim to demand, offer, release, payment and payout; if there is no deal, the deadline to sue is generally two years in California and Texas (Civil Practice and Remedies Code 16.003) and three in Washington.

Step 1: Which insurance company do I claim against?

Most injury settlements are paid by the at-fault driver’s liability insurer. That is a third-party claim: the company owes a duty to its own customer, not to you, and it will not pay more than the policy limit. The legal minimum per injured person is $30,000 in California, per the DMV, $30,000 in Texas, per the Texas Department of Insurance, and $25,000 in Washington (RCW 46.29.090).

Your own policy may pay too, through coverages such as medical payments, personal injury protection or underinsured motorist coverage. Claims on your own policy follow different rules. In Texas, for example, the prompt payment deadlines in Insurance Code chapter 542 apply to your own insurer but not to the other driver’s.

Once notified, the insurer must respond. A California insurer generally must acknowledge the claim within 15 calendar days and tell you what it needs as proof (10 CCR 2695.5(e)). In Washington, acknowledgment is generally due within 10 business days (WAC 284-30-360).

Step 2: What goes into the demand, and how is the claim valued?

The demand is a written package sent after treatment ends. It usually includes the crash report, photos, every medical record and bill, proof of lost pay and a statement of what the injury has meant for daily life, with a specific amount requested.

The adjuster values the claim in categories. The California Courts list the usual ones: medical bills, lost wages, emotional harm and other losses from the injury. Some are proved with bills, while others, like pain and emotional distress, are harder to measure. State law shapes the math. In Texas, medical expenses are limited to the amount actually paid or incurred (Civil Practice and Remedies Code 41.0105), not the full amount billed. In California, the regulator can find an offer unreasonably low after weighing factors that include whether the insurer considered the evidence you sent (10 CCR 2695.7(g)).

Step 3: How does negotiation end in an agreement?

The adjuster answers with an offer, and each side moves until they meet or stop. If you have a lawyer, the decision is still yours: under California rule 1.2, the client decides whether to settle, and rule 1.4.1 requires the lawyer to pass along every written offer promptly. An agreement reached at a Texas mediation and signed in writing is enforceable like any contract (Civil Practice and Remedies Code 154.071).

Step 4: What does the release say?

The release is the document that ends the claim. Read it before you sign. It usually says that:

• you give up all claims from the crash, including injuries you do not know about yet;
• the payment is not an admission of fault;
• you are responsible for paying liens out of the money;
• in some cases, the terms stay confidential.

Liens explain why insurers are careful at this step. In Texas, a release is not valid against a hospital that filed a lien unless its charges were paid or it is a party to the release (Property Code 55.007). Medicare also has a right to be repaid from the settlement, as CMS explains.

Step 5: How is the money paid and divided?

After the signed release arrives, a California insurer generally must pay within 30 calendar days (10 CCR 2695.7(h)). Washington treats claim procedures not designed to deliver payment within 15 business days of receiving the signed release as unacceptable, unless a statute, rule or contract sets the time (WAC 284-30-330).

If you have a lawyer, the money goes into a client trust account. In California the lawyer must tell you within 14 days that funds arrived and promptly pay what is undisputed (rule 1.15). In Washington, trust funds cannot be paid out until the deposit clears (RPC 1.15A). Fees and costs under the written agreement and the liens are paid, and the rest goes to you.

What changes when the injured person is a child?

A child cannot sign a binding release alone, so a judge reviews the deal.

• California. A petition for court approval of a minor’s settlement must disclose everything bearing on whether it is reasonable, generally on form MC-350 (rule 7.950).
• Texas. A child’s next friend or attorney may compromise the suit with the court’s approval, and the approved compromise is binding (Rule 44).
• Washington. Every settlement of a minor’s claim, filed in court or not, needs court approval, and the petition must list liens, fees and the child’s net amount (SPR 98.16W).

What to do now

1. Find out which insurer is paying and whether your own policy has coverage that applies.
2. Gather the records and bills for the demand as each provider finishes.
3. Ask for every offer in writing.
4. Before signing, read the release line by line and ask who must be repaid from the money.
5. If a child was hurt, plan for court approval.
6. Track your deadline to sue: two years in California and Texas, three in Washington (RCW 4.16.080).

Ask us how your settlement will work

If you want someone to walk through your own claim, from the insurer to the release to the check, call Beverly Law at (310) 552-6959. We handle car accident cases in California, Texas and Washington. You owe no fees or costs unless we win.

Common questions

Related pages

Car Accident Settlements · Car accident settlements · Why is my settlement taking so long? · Law Blog

Important: This page is general information, not legal advice, and reading it does not create an attorney-client relationship with Beverly Law. Laws change and every case is different; talk to a lawyer about your own situation. Attorney advertising. Prior results do not guarantee a similar outcome. You owe no fees or costs unless we win. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: 2026-11-12.