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What Happens When You Negotiate an Auto Accident Settlement with a Negligent Driver’s Insurance Company?


If you are injured in an auto accident caused by someone else’s negligence–say, a driver runs a red light and hits your car–Iowa law allows you to seek compensation for your damages. In many cases, this means dealing with the negligent driver’s insurance company. These insurers are often quick to offer a settlement, which rarely covers the full value of your damages. This is why you need to exercise caution in dealing with insurance companies and never agree to any settlement unless you are fully satisfied with the proposed terms.

Iowa Courts Rule Settlement Enforceable Despite Plaintiff’s Objections

Once you do agree to a settlement, the Iowa courts will treat it the same as any other legally binding contract. So even if you later change your mind, or object to a technical detail as to how the settlement is enforced, you may not be allowed to back out of the agreement.

A recent decision from the Iowa Court of Appeals, Arch v. White, offers a cautionary example. The plaintiff and the defendant in this case were involved in an auto accident. Several weeks later, the plaintiff sued the defendant, claiming his negligence caused the accident and resulted in damages to the plaintiff. The plaintiff delayed formally serving the lawsuit, however, as his personal injury lawyer was in the process of negotiating a settlement with State Farm, the defendant’s insurance company.

Eventually, the plaintiff’s attorney sent a letter to the State Farm claims adjuster assigned to the case. The letter said, “My client has instructed me to accept your $3,000.00 offer.” The attorney told the adjuster to send a release form for his client to sign, which is standard procedure in these types of cases. The release form basically states the plaintiff agrees to waive all possible legal claims arising from the accident in exchange for the agreed-upon settlement payment.

But when State Farm sent over its form, the plaintiff and his attorney had an objection. The form stated, “For the Sole Consideration of Three thousand ($3,000) dollars the receipt and sufficiency whereof is hereby acknowledged,” the plaintiff releases his claims. The problem was that State Farm did not actually send the $3,000 check with the release form. From the plaintiff’s standpoint, he was being asked to sign a document that acknowledged possessing a check he had yet to receive. But State Farm said it would not issue the check until it received the signed release.

As the Court of Appeals noted in its opinion, “Both parties dug in their heels and refused to budge from their respective positions.” The plaintiff finally took the position that State Farm had breached the settlement agreement and proceeded with his personal injury lawsuit against the plaintiff. The defendant argued the settlement agreement remained in force. Both the trial court and the Court of Appeals agreed with the defendant. As the appeals court explained, while the plaintiff’s “refusal to execute the release prior to receipt of the settlement draft [was] understandable,” it did not actually constitute a breach, and there was “no valid reason to undo the settlement agreement reached by the parties.” After all, the Court noted State Farm was still willing to pay the $3,000 provided it received the release.

Contact the Noyes Law Office If You Need Help Following an Iowa Car Accident

Dealing with an insurance company following an auto accident is rarely a pleasant experience. An experienced Southeast Iowa auto accident lawyer can help take that burden off of your hands. If you have recently been injured due to someone else’s negligence and need legal advice, contact the Noyes Law Office, P.C., today.


  • $1 Million
    Truck vs. auto case. Policy limits a 35 year old married mother of two killed.
  • $812 Thousand
    Rear-End Motor Vehicle Accident
  • $650 Thousand
    Settlement for spouse of deceased worker.
  • $575 Thousand
    Premises Liability Settlement
  • $500 Thousand
    Auto accident settlement with resulting post-concussive head complications (no wage loss).
  • $350 Thousand
    Injury from work with complications after surgery.
  • $300 Thousand
    Policy limits for 88 year old man rear ended.
  • $190 Thousand
    Read-End Accident with Tinitus Diagnosis.
  • $180 Thousand
    Slip and fall with a broken arm and torn rotator cuff.
  • $190 Thousand
    Bilateral carpal tunnel injury- $135,000 against the employer and $55,000 against the Second Injury Fund.
  • $185 Thousand
    Injured back.
  • $175 Thousand
    Broken leg of a 67 year old.
  • $160 Thousand
    Broken hip of 83 year old woman.
  • $155 Thousand
    Non-displaced fractured hip.
  • $100 Thousand
    Aggravation of degeneration disk disease.
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