How are Personal Injury Settlements Paid Out?

Samuel Nordean, ESQ. Founding partner of Nordean Law, APC
Samuel Nordean, ESQ. Founding partner of Nordean Law, APC

Samuel ‘Sam’ Nordean is a founding partner of Nordean Law, APC. He is passionate about standing up for people who struggle with accidental injuries and mistreatment from insurance companies. He has a Bachelor's and Master of Science degrees in Biochemistry from Portland State University. He got his Juris Doctor degree from Chapman University School of Law. Sam started Nordean Law to commit to helping people who cannot fight for themselves. His strengths are in representing car accident, fatal accidents, negligence cases, and liability accidents.

A personal injury accident is followed by a long process of gathering evidence, investigating, negotiating with insurance companies and claiming a deserving amount for your accidental injuries. You’ve spent quite some time working with a lawyer after being injured in an accident. Now what? 

The whole point of everything you went through was to receive the money. Resolving and settling the case and receiving the amount takes time. This blog will help you understand everything that goes into personal injury settlements payout. It will also touch on why it takes so long for the payment to reach you and the factors affecting your final settlement. 

When Will You Get Your Settlement?

If the deal with the insurance company is concluded on a fair and satisfying note, making the settlements takes less time. But if your case requires a trial, it normally takes 6 months to 2 years for the trial to happen in California. Only then will the paperwork start.

The compensation amount for your injury claim is in your name after you agree to the amount and sign the paperwork. Then, your cheque is processed, and you will receive it in a few weeks or months. 

Types of Settlement Pay-Outs

There are two types of settlement agreement payouts based on the type of accident and severity of the injury. 

Lump-Sum Settlement 

When the insurance company gives the plaintiff the entire compensation during the settlement, it is legally termed a Lump-sum settlement. Simply, a lump of the compensation amount is given as a sum. Personal injuries that do not require long-term medical treatment or do not cause long-term pain are adequate for this type of settlement payout. It is also more common for property damage cases. 

Often, an insurance company is more inclined to a lump-sum settlement because it doesn’t require a long-term commitment to one injury compensation case. 

Structured Settlement

A structured settlement is designated for injuries that take longer to heal, permanent injuries or disabilities caused by the accident. It requires a long-term commitment from the insurance company to send payments periodically to the victim. Such payments can last for years or even a lifetime. 

If your injury requires future expenses for treatment, this type of settlement is agreed upon. Similarly, suppose a personal injury has caused a permanent disability that prevents you from working to earn a living. In that case, the insurance should cover the wages as well as your treatment expenses for the long run. 

The Process of The Settlement Payout

We have compiled the five steps in the settlement payment process below so you can track where the money goes while you are waiting to be compensated. 

Step 1: You Sign The Release Form

Out of numerous pieces of paperwork associated with the legal procedures and insurance company policies that you will sign, the release form is the most important one. Your lawyer will draft a release form as soon as the settlement amount is finalized. Sometimes, the release takes time when the insurance company still doesn’t agree to the amount. If they delay in settling, you can file a lawsuit against them to demand the deserving amount.

The release form includes the amount to be compensated to you, claiming that the deserving amount is given and cleared out and that the defendant’s insurance company doesn’t owe liability for any future damage. After you have signed the release, there is no change in the amount, making the compensation given to you for your personal injury official. 

Step 2: The Insurance Company Writes You A Cheque

The release form you just signed will be sent to the defendant’s insurance company. They will then write you a cheque for that amount. The cheque is written under your name, as well as your lawyer, and it is sent to the law firm. If you represent yourself in the case, the cheque will be sent directly to you. 

Your attorney will review the cheque as they receive it and ensure it has the correct information and amount per the settlement agreement and the release form. 

Step 3: Depositing The Cheque

Your lawyer will deposit the cheque into their Trust Account. Often, personal injury cases deal with a large amount of money, and there is no place for them to earn interest. The Interest of Lawyers’ Trust Account (IOLTA) program was established to bridge that gap while keeping the money secure. This program is applied in California along with 50 other states. 

Your attorney will pay the court fees from here and fetch their share of the amount per the rules. The longer the money stays there, the more interest it earns. But that is not the case for most today as many choose to withdraw the amount from the trust account. So the primary purpose of depositing the cheque to the trust accounts is to keep it secure with the law firm while all the charges and expenses are calculated and paid.  

Step 4: Payout Third-Party Expenses.

At this stage, your lawyer will guide you through paying other expenses you owe or cover out of your pocket or personal insurance for your injury or property damage. They will calculate the amount to be paid and determine how much is covered by the money you receive. You might be in debt with hospitals for treating your injury, hoping to pay it out once you receive the insurance money. Such debts are called ‘liens’. 

With your lawyer’s help, you will pay the hospital or medical liens for your treatment. If you take the money from your health or government health insurance, that will also be paid out at this stage. 

Step 5: Receive Your Amount.

After paying the lawyer, court fees, medical expenses and whatnot, your lawyer will provide you with a bill of all the deductions from the total settlement amount. The remaining will be put on a cheque under your name and, finally, be sent to you. 

What Is the Average Settlement For A Personal Injury Claim?

Every case is different, and so is the amount of settlement. There is no average settlement, and your settlement amount for your personal injury claim depends entirely on your injury and the fault sharing. 

Still, to put it in numbers based on the history of personal injury cases in San Diego, the average settlement payout for a personal injury lawsuit is around $53,000. For moderate bodily injuries, it can range from $3,000 to $15,000. Severe injuries, long-term injuries, and permanent disabilities can reach a couple of hundred thousand or even millions of dollars. 

When there is one defendant at fault and one suffering victim, 100% of the settlement amount should be given to the victim by the defendant’s insurance. In cases with multiple parties at fault, comparative negligence is applied to determine the sharing of the fault of all parties involved and the determination of the amount deserved by each party. Each party’s settlement amount is determined separately based on their share of faults. 

For example, there is an accident between two cars and a pedestrian. Driver A is at 50% fault for speeding, driver B is at 30% fault for not turning the left blinker on while turning left, and a pedestrian is at  20% fault for crossing the road without a crosswalk. Now, driver A should pay 50% of the personal injury amount to driver B and the pedestrian out of their insurance company. Driver B should pay 30% of the amount to driver A and the pedestrian. While the pedestrian should pay 10% of the amount to the two drivers.  

Factors That Can Affect Personal Injury Settlements

Personal Injury settlements depend on different factors unique to different cases. Let’s dive deeper into the factors that can affect a settlement agreement.

1. Type of The Accident 

There is a wide spectrum of personal injury accidents with different approaches, ways to measure the amount, and the final settlement. Any injury from an accident caused by carelessness, negligence or intentional tort by another individual is counted as a personal injury, and the victim is eligible to file a claim. 

Vehicle or road accidents use comparative negligence to determine faults and compensation sharing. While in cases like medical malpractice, child abuse or elder abuse, the claim is filed against the defendant and/or the organization. Each requires different policies for analyzing the claim and different rates of compensation. 

2. Severity of Injury & Cost of Treatment 

A part of the compensation depends on the medical expenses. More severe injuries require more expensive treatment. Needless to say, the pain and suffering caused to you by the injuries you sustained. The compensation for severe injuries is much more.

At the same time, for permanent disabilities or long-term severe injuries, one big compensation just won’t do. You may require more treatment, assistance, physiotherapy or rehabilitation, which demands a higher and long-term medical expense. The insurance should give you the expense as per the settlement periodically to cover them. Therefore, the settlement depends on the injury’s severity and the treatment cost. 

3. Lost Wages

The number of wages lost due to the accident and injury also depends from case to case. The insurance money should cover the lost wages depending on how much you lost, affecting the overall settlement amount. For permanent disabilities or long-term injuries, there are more lost wages, so the compensation is more. If one has become permanently disabled for life and physically unable to work, insurance should compensate for their basic life needs. 

4. The Evidence Gathered 

For tougher cases to negotiate, the case’s reliability depends on the evidence gathered. You can claim that you were at lesser or no fault than the defendant with strong evidence of the accident or medical reports. The doctor’s note and the medical report can prove the severity of your injury. Similarly, CCTV footage can back the cause of the accident to determine who was at fault. 

If the claim is not backed with solid evidence that cannot be denied, there are chances of the settlement being less than what was initially proposed according to your legal rights and insurance policies. 

5. The Negotiation Process

One of the most important reasons to work with a personal injury attorney when you are injured in an accident is because of their expert negotiation skills. A weak negotiation can lead to an obligation to settle with a lower amount. When you are unaware of your rights and the policies, you might fail to properly negotiate the terms of compensation with the insurance company and be left with low pay. 

You need a good, experienced personal injury lawyer to negotiate a fair price for your injury, property damage, pain and suffering. The choice of lawyer makes an immense difference in the settlement amount.

Contact Top-Rated Law Firm In California 

While a personal injury lawyer plays a significant role in standing up for you to make a fair and satisfying settlement decision for you, they are equally needed after the settlement has been decided. It can be difficult to bring a release form and manage cheques and expenses on your own. We at Nordean law have personal injury attorneys with years of expertise in coming out with a proper settlement, managing all your expenses, and bringing your cheque to you as fast and efficiently as they can. Contact us to learn more about how your case will be handled and how you will be compensated with maximum benefits. 

Conclusion

After a lengthy investigation, negotiation, or, if necessary, a trial, the settlement process also takes some time to conclude. Your personal injury case will put your patience to the test. Still, you must trust the process and incorporate it to receive a fair amount in bringing everything you were put through to justice. All the steps taken to sign the release, process the cheque with the settlement amount and receive the payment are important to cover all the expenses. At the end of the day, the settlement amount is there to ease you from the atrocities of debt and medical bills after suffering from someone else’s fault. 

FAQs of How Are Personal Injury Settlements Paid Out?

How Does A Settlement Impact Your Taxes?

According to the Internal Revenue Service (IRS), the settlement for economic damages doesn’t impact your taxes at all in both structured and lump-sum settlement types, as mentioned in the IRC Section 104(a)(2). For non-economic and punitive damages, however, a part of the settlement can be subjected to taxes. 

What Is the Benefit of Obtaining A Negotiated Settlement Over A Court Award?

Obtaining a negotiated settlement means a quicker and less complicated settlement. Taking the trial to court requires building a case, and the trial date can take about 6 months to 2 years. The court fees will also be added to your expenses. 

How Much Time Do I Have To Decide On Settlements?

According to the statute of limitations in California, you have a two-year deadline to claim the insurance amount and file a lawsuit if necessary for your personal injury. The deadline for property damage is 3 years. You must decide on the settlement before that, and if you don’t agree with it, you must file a lawsuit before the deadline. 

Where Does The Money Come From In A Settlement?

The settlement money comes from the accident defendant’s insurance company. 

How Long After Settlement Do You Get Money?

In the best-case scenario, if the negotiation between your attorney and the insurance company is enough to make a proper negotiation to establish a settlement amount, you can get the money in two to four weeks or months, depending on how long it takes to deposit and fetch the cheque.

However, the trial date can take 6 months to 2 years if the case has to be taken to court. This can further postpone the settlement decision, and you will receive the money in two to four weeks or months from the verdict date.  

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