In issues where someone is injured or suffers financial loss brought on by the negligence of a third party, the two legal avenues to seek compensation are filing a claim or initiating a lawsuit. Both processes were instituted to recover damages but fundamentally differ in their procedures, purposes, and outcomes. It is crucial to understand the difference between the two legal actions to claim and receive fair and rightful compensation.
Most members of the public cannot understand the difference between a claim and a lawsuit and believe they are interchangeable terms. They are related, but a claim and a lawsuit are two different stages and means of resolving legal disputes in personal injury, property damage, and insurance matters. Understanding each will help apply them accurately and help individuals make informed decisions.
Definition and Purpose of a Claim
A claim is the first move in a dispute resolution process. A claim is a formal request made to the insurance company or the faulty party, demanding compensation for damages such as medical bills, lost wages, property loss, or pain and suffering. A claim cannot be termed as a legal proceeding but rather an administrative or pre-litigation request that may involve negotiation.
Personal injury and property damage claims are filed with insurance companies. For instance, a car accident victim or an injured person will file a claim with the at-fault driver’s insurer. The insurance adjuster investigates the incident, reviews documentation, and offers a settlement.
A claim aims to reach a resolution without resorting to court. This method is faster and less expensive than a lawsuit. The insurance companies most often offer settlements lower than the value of the damages. At this juncture, with failed negotiations, the injured party may move forward with litigation.
What Is a Lawsuit?
A lawsuit is a formal legal action filed in a court of law when one party (the plaintiff) submits a complaint against another party (the defendant), claiming wrongdoing and requesting remedy, specifically monetary damages. Lawsuits are regulated by strict procedural rules and require legal representation as they are complex.
Lawsuits comprise legal pleadings, discovery (exchange of evidence), pretrial motions, and possibly a trial before a judge or jury. Lawsuits take longer to resolve and result in a legally binding judgment.
Most lawsuits settle before trial, and the process exerts pressure on both parties to settle fast. If a settlement is not reached, the judge or jury will make the ruling based on the presented evidence.
Key Differences Between Claims and Lawsuits
Claims and lawsuits are different, and understanding them can help decide when to file one:
- Formality: Claims are informal and settled outside court. Lawsuits are filed in a court of law.
- Cost: Claims cost less as they do not incur court fees or prolonged legal representation. Lawsuits entail an attorney, court filing fees, and extended litigation costs.
- Timeline: Claims resolve within weeks or a few months, whereas lawsuits extend over a year or more.
- Burden of Proof: In a claim, the injured party must present evidence, but it is less meticulous than court proceedings. In a lawsuit, the plaintiff should present the documents and legal proof, give testimony, and bring expert witnesses.
- Control: Both parties in a claim have more control over the outcome; however, in a lawsuit, the judge or jury has the final say.
When Does a Claim Become a Lawsuit?
A claim can escalate into a lawsuit in some cases. This normally happens when the parties disagree on liability or compensation. For example, if an insurer rejects the claim or offers a low settlement, forcing the victim to seek the court’s intervention.
Claims and Lawsuits in Practice
To better explain the process, consider an individual sustaining injury in a slip-and-fall incident at a grocery store. The victim files a claim first with the insurance company of the store, submitting the medical records, witness statements, and the demand for damages. The insurer may offer a small settlement, which is usually not enough to cover the medical expenses. As the negotiations fail, the injured party may file a lawsuit in civil court.
The process will not shift from informal resolution to formal litigation. The court will lay down deadlines for discovery, pretrial motions, and a trial if required. The store may settle or continue the litigation, or the court may rule after examining the evidence.
Conclusion
Both claims and lawsuits help secure compensation for loss or injury. However, they differ in their structure, cost, and procedure. Filing a claim is the first step to resolution without court involvement. If negotiations break down or legal complications arise, a lawsuit will be resorted to ensure a fair outcome.
Understanding the benefits and limitations of a claim and a lawsuit ensures that individuals are able to choose the best available course.
