How Are Personal Injury Settlements Paid Out?
Personal injury lawsuits can be highly complex, and the process of receiving a settlement can be confusing. A personal injury settlement is an agreement between you and the other parties that resolves your legal dispute. Settlements are a common way of resolving cases. They can save parties both time and money. Here are how personal injury settlements are paid out.
How Personal Injury Settlements Work
If someone else’s wrongdoing caused you injury, you have the right to seek compensation for your losses. To seek that compensation, you must usually follow the following steps:
- Filing an insurance claim or sending a demand letter: When someone negligently injures you, the first step is to usually file an insurance claim by sending a demand letter to the negligent party’s insurer. The claim or demand letter should outline the details of the incident that caused your injuries. It should also outline the amount of compensation you are seeking.
- Investigation: Once you file your claim, the insurance company will assign an adjuster to investigate the claim. The purpose of the investigation is to determine fault and potential compensation.
- Negotiation: If the insurance company accepts that its insured was negligent or the party accepts fault, negotiations can begin. You and the insurance company may have to go back and forth to reach a settlement you agree on.
- Settlement: You and the other party reach a mutually acceptable compensation agreement. Once you reach an agreement, you sign the settlement document and await your compensation.
How Are Injury Settlements Paid?
When you reach a settlement agreement, you must agree on how the insurer will pay out the funds. There are several different ways in which you can receive your compensation, including:
- Lump sum payments: This is one of the most common ways to pay personal injury settlements. Under this structure, you will receive your compensation in one large amount. One advantage of a lump sum payment is that it gives you faster access to your funds.
- Installment payments: This is a popular alternative to lump sum payments. Under this payment structure, you will receive your funds in several payments over time. Parties often use this payment arrangement when there is a need for ongoing medical care.
- Annuities: An annuity makes regular payments over time. The difference between annuities and installment payments is that insurance companies back annuities. The payment structure of annuities can vary, depending on your needs. For example, it can provide fixed payments or payments that increase over time.
- Trust: This is a legal arrangement where a third party manages the settlement funds on your behalf. You can set up the trust to provide regular payments or to cover specific expenses related to your injury. A trust can be beneficial if you are concerned with managing a large chunk of money.
What Is Deducted from a Personal Injury Settlement?
Typically, the negligent party will send the settlement money to your attorney, who will put the funds into a trust account until they distribute it to you. The attorney will make necessary deductions before distributing the remaining funds to you. The deductions vary depending on the circumstances of your case and the terms of your settlement agreement. Some standard deductions include:
- Attorneys’ fees: Depending on your agreement with your attorney, they may deduct attorneys’ fees from the settlement amount. For example, if you agree to pay a 33 percent contingency fee, they will deduct that from your settlement compensation.
- Medical bills: These are often the most significant expense in a personal injury case. Sometimes, health professionals will wait for payment until after the settlement. If that is the case, your attorney will deduct the cost of your medical expenses from your settlement amount.
- Liens: If your health insurance has paid medical bills on your behalf, they may have placed a lien on your settlement.
- Court courts: There are several expenses related to litigation, such as filing fees, expert witness fees, and other expenses associated with the trial. These costs will come out of your settlement amount.
Not all settlements will have the same deductions. Therefore, you should consult your attorney to understand what will come out of your settlement funds before you receive them. Once your attorney makes the necessary deductions, you will receive the remaining funds.
Contact the Personal Injury Attorney of Loewy Law Firm for Help Today
Many personal injury cases reach a resolution through settlement. The personal injury attorney of Loewy Law Firm has years of experience negotiating settlements for our clients. Our dedicated team will help you pursue the compensation you deserve.
We can review your case during a free consultation and determine the best path forward. Having the right attorney fighting for your interests can substantially affect your potential settlement amount.
To learn more about your settlement options, contact us online or at (512) 280-0800.