What to Expect in a Personal Injury Settlement

A personal injury case arises when you suffer physical or emotional damage because of someone else’s negligence. Attacked by a dog without a leash during your run? That could be a personal injury case.

If you’ve been injured, you and the at-fault party or their insurance company will likely come to an out-of-court deal regarding the financial compensation you will receive for injuries sustained—that’s a personal injury settlement.

How much compensation should you expect? It really depends on the type of accident, injuries sustained, and many other unique factors. Let’s look at what you can expect, how settlements work, what financial aid you can legally redeem, and how a lawyer can help you receive fair compensation. 

What is a personal injury settlement and how do they work? 

A personal injury settlement is a voluntary financial resolution reached between two parties. Let’s go back to our dog attack example: After the attack, the dog’s owner confesses his mistake and agrees to cover all medical expenses for the dog bite. You find that to be fair and reasonable and you accept the terms with a promise not to pursue a lawsuit. That’s a settlement. 

Settlement agreements can occur before, during, or even after a trial. An overwhelming majority of them are reached before a formal lawsuit is filed, preventing the headache of the trial process. Regardless of when the settlement happens, the result is the same: The victim agrees to receive specified compensation in exchange for letting go of all legal claims against the at-fault party. 

Here is some recent data highlighting the evolving landscape of personal injury in the U.S.: 

• The personal injury market is valued at approximately $57 billion.
• Over 57 million Americans per year seek medical attention for personal injuries.
• Around 95% of personal injury cases are settled before trial.
• Only 50% of cases that go to trial receive a settlement in favor of the plaintiff.  

Despite these high numbers, the chances of winning a personal injury case through trial stands at an even 50-50 split. When you accept a settlement amount before or during a trial, you’re 100% guaranteed compensation. 

Types of damages

There are three main categories of damages that settlements tend to address. 

• Economic damages. This refers to tangible costs like medical bills, physiotherapy treatments, medicine, lost wages, and any property damage from the accident like cracked phone screen.
• Non-economic damages. These damages are difficult to quantify and assign a value to. They may include factors such as pain and suffering, emotional trauma, and loss of companionship and quality of life.  
• Punitive damages. These are also known as exemplary damages and are awarded in cases of extreme negligence as a way to penalize the wrongdoer and set an example for others.

7 factors that affect personal injury settlement amounts 

There is no universal personal injury settlement calculator. In most personal injury cases, settlement amounts are determined using several case parameters. Ultimately, the amount paid out comes down to what the parties are willing to agree to. Let’s look at a few key factors.

Severity of injuries

The most important factor influencing your personal injury settlement amount is the nature and severity of your injuries. Soft tissue injuries like bruises, minor cuts, or sprains are not considered serious—you’ll be able to return to your exact pre-injury position and performance level with some rest and care.

However, serious injuries like traumatic brain injuries or disfigurement can permanently alter your daily routine and require long-term medical treatment. Therefore, the compensation for those injuries is significantly higher. 

Also, just because you suffered the same injury as another person doesn’t automatically guarantee the same compensation. For example, you and your running buddy slipped on a poorly maintained park trail and you both broke your wrists. Even though the severity of the injury is the same, each could get a different settlement due to other factors.  

Medical expenses

In personal injury settlements, you may pursue monetary aid for current and future medical expenses. This includes doctors’ fees, medical tests (X-rays and MRIs), physiotherapy visits, surgery expenses, prescription bills, and even transportation costs for ongoing treatment. 

Lost wages and earning potential 

Even a minor slip-and-fall accident can require you to miss a few days of work, impacting your livelihood. You can seek to recover the wages you lost spending time off work. If the injury permanently impacts your earning capacity or future earning abilities, you may use this as another basis for claiming compensation.  

Pain and suffering 

A frequently overlooked factor in a personal injury claim is the victim’s pain and suffering, an important factor in mental and physical recovery. It's difficult to put an exact value on pain and suffering, but a skilled personal injury attorney will ask the following questions to help determine a fair estimate for this category of damages:

• Does the injury interfere with your daily life activities or ability to be independent?
• Has the injury impacted your quality of life? 
• Are the injuries chronic or permanent in nature?
• Did the accident cause any mental or emotional discomfort? 

Fault and liability 

Personal injury cases hinge on proving legal liability, usually under a “negligence” standard. Suppose the at-fault party is entirely responsible for the accident: They ran a stop sign and crashed into your car, and the whole thing was captured on traffic cameras. They are unlikely to fight your claims.

Settlement numbers tend to be higher when there's no doubt about who is liable. However, even the slightest hint of shared responsibility can drastically lower your personal injury claim. 

Insurance coverage 

Insurance is the most common avenue of recovering money in a personal injury settlement. Coverage may be available under auto insurance, home insurance, workers’ compensation, and/or general liability insurance policies—but the amount is almost always limited by a maximum coverage amount (also known as a “policy cap”). If your claim goes beyond the policy limit, you will have to find alternate sources of compensation, like going after the liable party’s personal assets or examining your own insurance coverage.

If the at-fault party has poor or no coverage, they probably don’t have the means to pay up for your injuries. Having greater insurance coverage generally leads to higher settlement agreements.

Trial and length of trial (if applicable) 

The cost of defending a personal injury case in court may be significant. Lawyers’ fees, court charges, expert witness fees, administrative charges, and other miscellaneous expenses can put a hole in your pockets. A skilled lawyer will use this reality as a  bargaining tool. They will ask the at-fault party, "Do you want to risk paying for these additional costs or would you rather settle?"

It’s important to note that many states have a cap on what the judge or jury can award for certain damages. For example, Oklahoma has a $350,000 cap on non-economic damages. 

Personal injury settlement amounts examples

The circumstances surrounding every personal injury care are unique, so it's best to not set your expectations around others' experiences and settlement amounts. The following data, however, can help to give some idea about a typical personal injury settlement:

• A typical personal injury settlement amount for bodily damages from a car accident is between $20,000 and $25,000. 
• In slip-and-fall cases, the median settlement amount is approximately between $10,000 and $50,000. One of the most significant slip and fall cases occurred in New York where a construction worker slipped off the scaffolding and was awarded $18 million by the jury for his injuries. 
• In pedestrian accidents where a pedestrian is hit by a car and suffers minor injuries like bruises or whiplash, the settlement figure is usually between $10,000 and $75,000.
• Workplace injury settlements average around $41,757.
• The national average for motorcycle accidents is slightly above $70,000, but catastrophic accidents can lead to settlements upwards of $1 million.   

Remember that the mentioned figures aren’t rules, they’re guidelines. No two injuries and no two cases are ever the same. 

The personal injury settlement process

The road to get fairly and adequately compensated begins with picking the right attorney.

• Consult an accident attorney. It's crucial for every personal injury victim to start by seeking legal advice. An experienced attorney can tell you if you have grounds for a valid claim, assist with evidence gathering, and negotiate with the other party or insurance company.  
• Initiate a demand letter. Sending a demand letter informs the other party of your injuries and what you are seeking. It’s like a warning—if they don’t respond favorably, you will have to pursue further legal action. 
• Negotiate settlement. This is a back-and-forth process of making counteroffers or bargaining until the parties reach a fair mid-point. The length and fate of negotiations depend on each party’s willingness to agree and the amount and quality of evidence. 
• Finalize and sign agreement. If a settlement is reached, draft the payment terms and conditions in a formal, written agreement. Both parties need to sign the settlement agreement, document must generally include a release of liability statement, which basically says the case is closed and the injured party can’t go back to the insurance company or party claiming more damages. 

5 benefits of a personal injury lawyer

While you can represent yourself in a personal injury case, getting legal help on your side makes a world of difference.

An experienced personal injury lawyer can do quite a bit for you:

1. Navigate legal complexities. Personal injury law is a maze, with complexities like the burden of proof, liability, and statute of limitations—all of which are subject to state laws, making it complex for anyone unfamiliar with the legal world. 
2. Gather evidence. Personal injury settlements are often driven by strong evidence like accident and injury pictures, eyewitness statements, and doctor's notes. Novices can hamper their settlement if they neglect documenting evidence. 
3. Negotiate effectively. Insurance providers are often accused of relying on the “fine print” in an insurance policy to pressure the injured person into accepting a lowball offer. Most personal injury lawyers are familiar with these tactics and are skilled at fiercely negotiating settlement amounts. 
4. Maximize settlement. Attorneys not only help clients recover compensation but often increase the settlement amount by forming a strong, legally rigorous case. A Nolo study reports that the average recovery with an attorney is $77,600, compared to $17,600 without one. 
5. File a personal injury lawsuit. If all settlement negotiations hit a standstill, the attorney can competently lead you through the lawsuit, build a solid case, and make persuasive arguments before the judge or jury.

Another plus is that most personal injury attorneys work on a contingency basis, meaning there are no upfront costs and they only get paid if you win.

FAQs

Is a personal injury settlement taxable?

The Internal Revenue Service treats personal injury settlements tax-free, but there are exceptions to this rule. For instance, punitive damages get counted as part of your gross income and are taxable. Also, compensation for purely non-economic damages without physical injury is taxable, while compensation for bodily damages is not taxable. Speak to a tax attorney if you are unsure about your tax obligations after receiving a settlement. 

What personal injury claims pay the most?

As per a 2005 Bureau of Justice study, the average personal injury settlement in product liability cases is $748,000, closely followed by medical malpractice cases, which pay an average of $679,000. 

How long does it take to receive a settlement from a personal injury claim?

There isn’t a universal timeframe, but it may be fair for an injury victim to expect the settlement amount to arrive within four to six weeks. You can speed up the payment process by including details regarding the mode and timing of payment in your settlement agreement. 

Can a settlement be reopened after it has been agreed upon?

Once you have signed on the dotted line, the settlement agreement becomes legally binding and enforceable. Generally, settlements are a way of puting the matter to rest, but that’s not always the case. For instance, settlements can be challenged in court or parties can voluntarily choose to adjust an agreement. In most cases, once the agreement is reached and executed, there is no further negotiation that goes on.