When navigating a personal injury claim, you and your attorney may discuss potential compensation amounts. Understanding how you’ll reach this number or how the payment will be distributed can be confusing. Settlements aim to cover things like medical expenses and lost wages, but there are many steps between filing an insurance claim and getting paid.

So, how do personal injury settlements work? Below, our team from Max Meyers Law PLLC explains the settlement negotiation and payment process.

The Settlement Negotiation Process

If you suffer injuries from someone else’s negligence, your first step is typically to file an insurance claim. To negotiate a settlement with the liable party’s insurance provider, you will first need to calculate the full extent of your damages. You or your attorney will then send a demand letter that details your injuries, your claim, and the compensation you’re pursuing to the insurance company.

From there, the insurer will review the letter, accept it, deny it, or respond with a counteroffer. The negotiation process typically begins from here, where you or your attorney converse with the insurer to land on a settlement that reflects your full damages.

How Settlements Are Paid Out

So, how do personal injury settlements work? To answer that, we need to explain the payment process. If you and the insurer agree on a settlement, the payment doesn’t automatically hit your account. Instead, you will typically follow these steps:

All Parties Sign the Release Form

Upon agreeing on a settlement, all parties must sign a release form. This form protects the defendant from future liability claims in exchange for their payment. Essentially, you cannot sue the defendant for this specific accident once you accept their settlement offer and sign the release form.

Your attorney can draft this form, and both parties must sign it.

You Choose the Payment Method

If you’re asking, “How do personal injury settlements work?” you’re likely wondering about payment. You have a couple of options when accepting a settlement:

Lump sum payment: Accept the full compensation amount at once for easier management of medical debt and other payments.
Structured settlement: Agree to a structured payment plan over a set period of time, offering regular income for long-term expenses.

The right payment option ultimately depends on your expenses and financial preferences. If you have a significant amount of debt to pay off, a lump sum may make sense. If you’re anticipating long-term rehabilitation costs or issues finding employment, you might prefer a structured settlement.

The Check Is Issued

After choosing your payment type, the defendant’s insurance company will issue the check. The check will be issued in your name, but it may go to your attorney first for official review.

You Pay Any Outstanding Debts

Before proceeding, injury victims typically use the settlement check to pay their outstanding debts. This includes attorney fees, medical liens, and any other bills accumulated throughout the settlement process.

Your attorney may collect their fees upon your payment and help you settle your debts before issuing the remainder of your check. If not, you would be in charge of taking care of these tasks in a timely manner.

How Long Do Settlements Take To Pay Out?

The timeline of the settlement process depends on numerous factors. Settlement negotiations can take anywhere from weeks to months, depending on available evidence, case complexity, and the insurance company’s willingness to meet your demands. Once you’ve reached an agreement, insurers have 30 days to issue the check, though they’re typically expected to do so immediately.

Do You Need Help Navigating the Settlement Process?

If you’re still asking “How do personal injury settlements work?” or have questions about your case, we’re happy to help. Call Max Meyers Law PLLC at (425) 559-9453 to book a consultation.

How Do Personal Injury Settlements Work?