Define: Settlement

Settlement refers to the resolution of a legal dispute or lawsuit between parties outside of court through mutual agreement. It involves negotiation and compromise, where the parties involved reach a mutually acceptable resolution to the conflict, typically in exchange for dropping or dismissing legal claims or charges. Settlement agreements can cover various aspects of the dispute, including financial compensation, changes in behavior or practices, or other terms agreed upon by the parties. Once a settlement is reached, it is usually documented in a written agreement signed by the parties, which becomes legally binding and enforceable. Settlements offer several advantages, including avoiding the time, cost, and uncertainty of litigation, preserving confidentiality, and allowing the parties to maintain control over the outcome of the dispute. However, settlements may also involve compromises and trade-offs, and it’s essential for parties to carefully consider the terms and implications of any settlement before agreeing to it.

In Insurance Law, a settlement is an agreement between the insurance company and the injured party to compensate the victim for their loss. Settlements can include payment for lost wages, medical costs, future wages, etc. Most claimants who are injured in a personal injury case should consult with a lawyer prior to accepting a settlement offer from an insurance company.

Most personal injury cases are settled out of court through alternative conflict resolution which include mediation and arbitration. It is not uncommon for each party to agree to a settlement offer to avoid taking the case to court, which can result in high costs for both the plaintiff and the defendant.

In some cases, such as a car accident claim for an uninsured motorists, (when you are forced to bring a claim against your own insurance company) the agreement to settle the case through arbitration is already included in the insurance contract and you will not have an option to file a lawsuit because arbitration will be binding.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March, 2024.