How Are Personal Injury Settlements Paid Out?
Posted on Thursday, September 1st, 2022 at 5:16 pm
Understanding what happens to the money if you settle your personal injury claim is crucial. The settlement offer you accept isn’t necessarily the amount of money you will receive. You have to consider various aspects of the claim, such as the money owed to your doctors and the fees your lawyer charges.
Below is an explanation of how insurance settlements work, so you know what to expect when the check comes in.
The Process of Settling a Personal Injury Case
Settling an insurance claim for your accident-related injuries can take a while. By the time you accept an offer, you’re likely eager to take the money and put this whole experience behind you. However, you must complete multiple steps first.
Once you settle your personal injury claim, you’ll have different forms to sign. The most important is the release from the insurance carrier, which may be included in the settlement agreement. The release outlines various terms of the agreement. It also releases the insurance company from all future liability for your injury and confirms that you won’t try to seek additional compensation from them in the future.
Your attorney must review the terms of the release to ensure that the terms meet your needs. Negotiating with the insurance company can be challenging and could delay the process. Signing a release form isn’t as straightforward as you might think. That’s why letting your lawyer do the work for you is critical.
Once you feel comfortable with the settlement, you can sign the release. The insurance carrier will write the settlement check for the agreed-upon amount. Typically, when you hire a personal injury attorney, the insurer writes the check payable to both you and the law firm and mails it to them.
Deposit the Check
Your attorney will deposit the check in their firm’s account. With the money in their hands, a few more steps are necessary before they can write a check to get money to you.
You likely have multiple bills you have not paid yet. Sometimes, personal injury lawyers can negotiate with an accident victim’s medical providers. If these providers agree to place your account on hold until the case settles, they won’t expect you to pay your bills upfront and won’t send them to collections.
Once you reach a settlement agreement, your lawyer must contact your doctors and negotiate payment. Negotiating a lower amount than what you owe is possible. However, that will depend on multiple factors. Some healthcare professionals require paying the total amount, while others are willing to forego part of the debt based on the settlement and other bills the accident victim still owes.
Many personal injury attorneys take cases on contingency. That means they don’t require upfront fees or costs to represent you. However, they take a percentage of your settlement to satisfy their fees and the expenses incurred while working on your claim.
After paying off your debts, your lawyer will calculate their fees from the remaining amount of money and pay themselves.
Once your lawyer takes out their payment for their fees, the remaining balance will be yours. They will write your check and provide copies of the release and other documents associated with the settlement.
Settlement Options in a Personal Injury Case
You might have options when deciding how to receive your insurance settlement. Many people opt for one lump-sum payment. However, you could decide to receive structured payments over a specified period.
You won’t face tax implications for either option. Whether you choose to receive the total amount upfront or smaller scheduled payments, the IRS won’t require you to pay taxes on your settlement.
The lump sum option benefits people who want to use the money for paying immediate expenses or investing. However, some people prefer to set up a structured payment plan if they worry about managing a large amount of money. Instead of risking spending it all quickly, you can come up with a schedule to align with your financial needs.
Since 1976, Abel Law Firm has fought for accident victims in Oklahoma. We believe in providing quality legal services and representation to members of our community. You deserve the chance to hold the at-fault party responsible for causing your injuries. We will prioritize you and your case and pursue the maximum compensation possible.
With over 150 years of combined legal experience, you can expect a dedicated team to advocate for your rights and aggressively seek justice on your behalf. Our team understands how devastating it can be to get hurt in an accident that isn’t your fault. We will remain by your side to guide you through the complex claims process and try to reach your desired outcome.