Settlement

What You Need to Know

Settlements can occur at any stage — before a lawsuit is filed, during the lawsuit process, or even after a trial has begun. Settlement agreements typically include a negotiated payment amount, a release of liability stating the claimant cannot sue you again for the same incident, confidentiality provisions, and no admission of fault on your part. Your insurance company handles settlement negotiations for covered claims, and while they typically need your consent to settle, most policies give them significant authority to settle claims they believe should be resolved.

Why It Matters for Restaurant Owners

Understanding how settlements work is important because 95% or more of claims settle before reaching a jury verdict. Settlements benefit everyone: you avoid the time, expense, and uncertainty of trial; the claimant receives compensation more quickly and with certainty; and your insurance company reduces legal costs and avoids the risk of a large jury verdict.

However, settlements also mean you're paying money, through your insurer, for claims that might have been defensible in court. Your insurer may recommend settling a questionable claim for less than the cost to defend it through trial. Settlements don't mean you were at fault — they're often business decisions made to avoid greater expense and risk. However, repeated settlements do affect your insurance costs and renewability, as insurers view restaurants with frequent claims as higher risks. This is why prevention through strong risk management is so important — every claim you prevent through good safety practices is a settlement you avoid.