A personal injury settlement is a financial agreement between the victim and the at-fault party after an injury. Know what to expect from your claim.
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by Swara Ahluwalia
Swara has over six years of writing experience in the software, manufacturing, and small business segments. When she ...
Updated on: August 12, 2024 · 10 min read
A personal injury case arises when you suffer physical or emotional damage because of someone else’s negligence. Attacked by a dog without a lease during your run? That’s 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.
A personal injury settlement is a financial resolution reached between two parties involved in an accident without going to trial. 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 or during a trial. An overwhelming majority of them are sorted 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 a specified monetary amount in exchange for letting go of all charges against the at-fault party.
Here is some recent data highlighting the evolving landscape of personal injury in the U.S.:
These numbers signify that personal injury is a growing market, and more and more Americans are likely to face a personal injury. However, 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.
There are three main categories of damages that settlements address.
There is no universal personal injury settlement calculator. In most personal injury cases, settlement amounts are determined using several case parameters. Let’s look at the big ones.
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.
In personal injury settlements, you have the legal right to 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.
Even a minor slip-and-fall accident can require you to miss a few days of work, impacting your livelihood. Any time off work is eligible for compensation. If the injury permanently impacts your earning capacity or future earning abilities, you can claim for loss of future earnings.
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 provide a fair estimate for this damage:
Personal injury cases hinge on proving negligence. 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 is the most common avenue of recovering money. Personal injury settlements are paid out by auto insurance, home insurance, workers’ compensation, and liability insurance providers—but the amount is almost always restricted by 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 uninsured accident 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.
The cost of taking your personal injury case to court may be significant. Lawyers’ fees, court charges, expert witness fees, administrative charges, and other miscellaneous expenses can put a dent in your pockets. A skilled lawyer will use these variables as bargaining tools. 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.
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 should give you a better idea about a typical personal injury settlement:
Remember that the mentioned figures aren’t rules, they’re guidelines. No two injuries and no two cases are ever the same.
The road to get fairly and adequately compensated begins with picking the right attorney.
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:
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.
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.
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.
There isn’t a universal timeframe, but it's 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.
Entering a settlement agreement is a once-and-done situation. Once you have signed on the dotted line, the settlement agreement becomes legally binding and enforceable. The agreement serves as a release of liability and the courts will not reopen the case even if you experience injuries or losses later.
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