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How Does A Wrongful Death Insurance Claim Work?

Surviving family members may make a wrongful death claim for financial compensation from the person or party responsible for negligence that resulted in a loved one's death. Wrongful death lawsuits may be brought against an at-fault driver, medical professional, third-party contractor or sub-contractor, or any other party who may be held responsible for negligence resulting in death.

Estimating the potential value of a wrongful death claim or lawsuit is extremely difficult and requires a lots of speculation, which is not a suitable strategy for a qualified attorney. Any good wrongful death lawyer knows that conducting a thorough investigation will reveal important evidence and other details that can impact the overall value of a claim, both positively and negatively.

For this reason, the attorneys at Davis Law Group avoid making any definitive statements to family members and loved ones about the value of a potential claim, particularly early on in the case. Instead, what you will find on this page is helpful information about how a wrongful death claim or lawsuit works, as well as the factors that can have a positive or negative impact on the value of a claim. 

How Insurance Companies Handle Wrongful Death Claims

To recover the best possible settlement for a wrongful death claim, you should know how the insurance company does business. As you already know, the reason any insurance company exists to make a profit. This is the carrier’s primary goal – to make as much money as possible for its executives and shareholders.

A wrongful death claim is no different from any other form of personal injury claim as far as the insurance company's strategy and process for investigating claims. Insurance companies must take in more money than they pay out in order to remain profitable, which is their primary goal. Thus, you can expect that an insurer will push back on a wrongful death claim and attempt to settle the claim for as little as possible. 

Because of this, it is often in surviving family members' best interests to at least consult with an experienced wrongful death lawyer early on in the claims process to determine if hiring a lawyer would increase the chances of a successful outcome. 

How Are Wrongful Death Claims Paid Out? 

Typically, a wrongful death claim will be filed with an insurance company which provides liability coverage to the person responsible for the victim's death. The insurance company would then pay out a settlement (or judgment/verdict if the case proceeds to trial) to the claimant once a settlement has been agreed upon, based on the limits of the insurance coverage available.

If the party responsible for the death does not carry liability insurance, that party may be individually responsible for paying the settlement or judgment to the surviving family. However, the practicality of this situation would depend upon the responsible party having enough assets to be able to cover the settlement or judgment. 

Lawyers will typically only agree to represent families in a wrongful death claim if the at-fault party has an adequate liability insurance policy, or if it is known that they own enough assets to be able to cover a potential settlement or judgment. At-fault parties without insurance or significant assets are unlikely to be able to pay a claim, and may end up filing for bankruptcy to avoid wage garnishment or other legal mechanisms for executing payment. 

Are Wrongful Death Settlements Taxable? 

Wrongful death settlements that come as a form of compensation for damages are usually non-taxable. This means that as long as the damages recovered by the surviving family members are meant to compensate for the loss and pain & suffering, the family would likely not have to pay any taxes to the IRS. Punitive damages could potentially be subject to taxation, but that is not something our firm encounters often since there are no punitive damages in Washington state. 

Beware Of Insurance Companies' Tricks In Wrongful Death Claims

Insurance companies' primary goal is to make profit. They do this by handling claims in a way that easily frustrates people to the point that they want to be done with the claims process. Studies have shown that this is an effective strategy for convincing claimants to accept settlements at a lower value than they might deserve. 

Insurance adjusters will attempt to obtain statements from you and other witnesses that go against your best interests. While insurers are required to conduct business in good faith, sometimes they push the envelope and violate their legal duty to claimants. We have handled cases where the carrier has deliberately “lost” evidence that would be favorable to my client. Just remember that the carrier is looking for any opportunity to reduce its payout.

Keep in mind that the more persuasive the evidence submitted to support the claim, the higher the likelihood of a more favorable settlement recovery. Having an experienced personal injury attorney working in your corner gives you the absolute best chance of securing a favorable outcome in your case.