How to Get Paid After a Car Accident
During a car accident lawsuit, the plaintiff and their lawyer work hard to prove negligence. Compensation only arrives if they establish liability.
Your car accident lawyer estimates a fair value for your claim. They prepare for negotiations with the other party to obtain a successful outcome. The chances for a settlement usually are high, and you often do not need to go to trial.
While your attorney speaks with the negligent driver’s insurer, you may wonder how you get paid for a car accident settlement. The insurance company is in charge of payments, but both sides must proceed with the settlement process.
Two Types of Settlements
After the insurance company processes the payment, you may get your car accident settlement in one of two ways. Many people receive compensation in the form of a lump sum. A lump sum is when the other side sends the entire reimbursement in a single paycheck.
Lump sum compensation has a few benefits. One advantage is you can pay any immediate bills right away. You can reduce or get rid of accident-related debts quicker since you have access to your entire settlement. Furthermore, large lump sums allow you to pay other bills or unexpected expenses.
Some people use a part of their lump sum to invest. They may use a portion to start a business or purchase stocks. You may generate more money in the future for a retirement fund or as a second source of income.
However, investments can be risky. In addition, a person may not have the funds for emergency bills if they use up all their compensation on investments.
A person might choose a structured settlement if the settlement is large enough. Essentially, the insurance company sends compensation through a series of paychecks. However, a plaintiff and their lawyer may initially get a portion of the settlement as a lump sum.
Both parties negotiate the terms of the structured settlement before signing the papers. The settlement terms include the timeline and frequency of payments and the amount on each check. Someone may even decide if the insurer should continue sending compensation to surviving family members upon the claimant’s death.
One advantage to a structured settlement is the consistent funds. If you have ongoing medical bills, you can pay them with the regular arrival of payments. Of course, you may spend money on other expenses to reduce stress.
Furthermore, budgeting becomes easier when you know how much to expect every pay period. You can save some money and use the rest on expected costs.
However, a person is less likely to pay unexpected expenses or invest with a structured settlement because they do not have full access to their compensation.
How to Get Paid After a Car Accident?
File an Insurance Claim
People face different expenses for medical care and vehicle repairs after car accidents. Resources can run low quickly if someone must stay home from work to recover. As a result, auto insurance companies have a claim process for injured people to receive payment.
To file a claim, you first call an insurance agent to report the incident. You must mention the vehicles involved and who drove at the time. Then, give a description of the accident and the severity of the damage.
You will receive a claim number and wait for the assigned adjuster to evaluate your case. The adjuster may contact you in the meantime for additional information. They may request a police report, which you can get a copy of at a local police station.
Afterward, the adjuster estimates the cost of repairs and other expenses. The insurer uses the report to determine how much to pay you. The amount you get depends on the accident conditions and claim type. For example, bodily harm claims cost an average of $20,230. Meanwhile, property damage has an average worth of $4,711.
You must sign papers to finalize the agreement if you accept the insurance company’s offer. The adjuster then authorizes the check before they send it to you.
If you file a claim with the other driver’s insurer, contact a lawyer before you do. Insurance companies usually record phone conversations. The adjuster may use the recorded call to determine negligence. An attorney may help you avoid saying anything the insurer could use to devalue your claim.
Start a Car Collision Lawsuit
When you file a claim, you can negotiate with the insurance company for a larger payment. However, the liable party may refuse to agree to a reasonable settlement, making compensation harder to obtain.
Alternatively, the other driver may not have insurance. The policy can pay for damages if the victim has uninsured motorist coverage. However, not every driver has an add-on plan for uninsured motorists.
Depending on the circumstances, a lawsuit may be necessary instead of an insurance claim for car accident payments. The injured party can use the civil court system to recover damages from the defendant. They can hire a lawyer to help them file the paperwork and go through the legal process.
A lawsuit begins when the individual submits a complaint to the court. They then have around 30 days to serve a copy of the complaint to the defendant, and the plaintiff must wait for the opposing side’s response.
The length of the lawsuit depends on many factors, including if the defendant denies any allegations in the complaint. Pre-trial negotiations at any point in the process lessen the wait time for compensation. Nevertheless, resolving a vehicle collision case can take several months to over a year.
A car accident lawyer can help ensure a lawsuit proceeds efficiently. They can effectively communicate with the other side to negotiate a settlement before a trial becomes necessary.
How the Settlement Process Works
Once both parties agree on a settlement, the insurance company sends a check. However, you must complete a few steps before you can get the money. The first part of the settlement process requires signing the release papers. The insurance company will not issue the check until you do.
The settlement release document contains the terms and conditions of the agreement. They are binding once you provide a signature. However, the terms contain legal jargon and may be confusing. Therefore, have your lawyer review the papers before signing.
After you sign the release document, the insurer will process the check. The company must send payment within a reasonable period. They usually issue the money through the mail. If you have a car accident attorney, the check goes straight to their office.
Compensation usually takes four to six weeks to arrive. Once it does, your lawyer deposits the check in a secure bank account. When the funds clear, they deduct their legal fees and other costs from the amount. If liens apply to your case, your attorney pays them as well.
Then, the lawyer produces another check. They send the remaining money to you through the mail, and you can deposit the funds as soon as you get them.
You might wait longer for compensation if delays occur. One reason for delays is if your lawyer disagrees with any of the conditions in the release papers. Both sides may need to have further negotiations.
Another delay could happen if the insurance company waits to process the settlement check. Insurers might hold onto the money if the injured party did not sign the document correctly. In some cases, stagnation happens if the claim involves a minor or a deceased person’s estate.
Other reasons can prevent someone from receiving their compensation on time. If your lawyer does not receive the check after a few weeks, they should contact the insurer for a follow-up. You may need to call the adjuster directly if you do not have an attorney.
Additionally, liens can extend the waiting period for a settlement check. The lawyer speaks to the healthcare providers when a claim has an unpaid medical debt or lien. Your attorney will negotiate to ensure you do not have to pay more than you should, and these negotiations can take time.
Why You Should Wait to Sign the Release Form
A quick settlement may seem convenient since you get the money sooner. However, waiting to agree to an offer may be in your interest. You may not know the severity of your damages until later. You might have to undergo extensive treatment, further increasing the value of your claim.
If a person settles early, they may realize they have additional accident-related expenses in the future. They might wonder if they can reopen their case to pursue damages. However, the individual cannot reopen their case once they accept a settlement.
The settlement release document frees the defendant from legal liability for the collision. As a result, the plaintiff cannot seek further compensation from the negligent party for the same accident.
An exception exists if multiple entities were responsible for the crash. While you cannot sue the same party again, you can go after another individual for additional reimbursement. An attorney can determine if more than one entity was negligent.
Insurers may try to have you sign an early settlement before you understand how your injuries will affect you in the future. Therefore, having a car accident lawyer by your side can significantly affect your compensation award. They can accurately value your claim and work to get you enough money to cover your losses.
Damage Caps May Affect Car Accident Settlements
Some states cap damages. A damage cap is the most the defendant must pay a plaintiff. Determining when a limit applies to a lawsuit usually depends on the jurisdiction. Moreover, some damages may have restrictions while others do not.
Usually, economic damages do not have a maximum amount. However, some places apply a cap on non-economic damages in car accident cases. There may be limitations on punitive damages as well.
Nevertheless, most states do not place damage caps on car accident compensation. You can still get the money you need, even with a maximum amount.
How to Pay Expenses Until the Check Arrives
The other driver’s insurer will not pay reimbursement until the injured party establishes negligence. As a result, the individual needs to pay for medical expenses and repairs in the meantime.
If you have personal injury protection coverage, your insurance may pay some of the costs after an accident. Moreover, personal injury protection may cover some of the lost wages while you recover.
A healthcare insurance plan may apply as well. However, you must spend money out of pocket if you have no coverage.
Once you receive your settlement, you can pay any remaining medical bills. You will also likely need to reimburse your insurers for the percentage they cover.
Is Your Car Accident Settlement Taxable?
When people receive their settlement, they struggle to pay bills. After your lawyer mails you your check, everything is yours to keep. Federal tax laws do not make settlements taxable. The IRS does not include your compensation for physical injuries or sickness as part of your gross income. Furthermore, the state government cannot tax your reimbursement.
Additionally, surviving family members might receive compensatory damages if the victim died after the collision. Since wrongful death is another personal injury lawsuit, the money generally is non-taxable.
If you are part of the 5 percent who get punitive damages, you must report the money to the IRS. Your personal injury lawyer can request the judge to separate the punitive damages from the rest of the settlement in the verdict. The separation makes filing taxes more convenient, and you do not risk paying more than you should.
If you are in a car accident and need assistance navigating how to receive compensation for your injuries, contact an attorney today to learn more.
I represent individuals in Missouri and Illinois in all types of personal injury cases. In my short time here I have obtained a judgment for $2.5 million and settled a large class action lawsuit for a confidential amount.
I love the city of St. Louis and support it and give back whenever I can. Recently I was appointed by Mayor Francis Slay to serve on the Advisory Board for the Gateway Mall.
I am married to my lovely wife Lauren and we have two beautiful daughters, Mia and Bridget.