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How are Personal Injury Settlements Paid Out in Florida?

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On This Page
  1. You Must Reach an Agreement with the At-Fault Party
  2. Both Sides Will Execute Releases
  3. You Might Have Liens to Resolve
  4. The Insurance Company Will Send Your Attorney a Check
  5. Your Attorney Will Distribute Your Compensation to You
  6. Personal Injury Settlements and Taxes
  7. After the Settlement, Keep These Tips in Mind
How Are Personal Injury Settlements Paid Out in Florida

Multiple steps must occur before you have the opportunity to cash a settlement check. If you have questions on how personal injury settlements are paid out in Florida, you could benefit from a consultation with an Orlando personal injury lawyer.

The vast majority of personal injury cases are resolved through a mutual settlement. These settlements could occur early on in the process and conclude without extended delays. That does not mean you will receive your settlement check immediately.

You Must Reach an Agreement with the At-Fault Party

Before the other side will pay for your damages, you must first negotiate a settlement. Negotiating a personal injury settlement can be a complex process, but guidance from an attorney could help you get the compensation you deserve.

Settlement negotiations could begin shortly after an accident. While some cases drag on for months or even years, an attorney can resolve a case before a lawsuit is ever filed.

You only have one chance to settle your personal injury case, so the final settlement value must be in your best interest. You will also have to file the lawsuit before the two-year timeline imposed by Florida Statutes § 95.11(3)(a).

What if the Settlement Offer is Too Low?

When faced with a settlement offer that is perceived as too low, plaintiffs have several avenues to pursue a more favorable outcome. Initially, it’s crucial to communicate through your attorney that the offer is inadequate, providing detailed justification backed by evidence such as medical records, expert testimonials, and documentation of lost wages and other expenses. This can prompt a reevaluation of your claim’s worth by the insurance company.

If negotiations stall, mediation is a valuable next step. This process involves a neutral third party who facilitates a dialogue between both sides, aiming for a mutually acceptable resolution. Mediation offers a less adversarial approach to resolving disputes and can lead to a fair settlement without the need for a trial.

Arbitration is another option, where a neutral arbitrator hears both sides of the dispute and makes a binding decision. While faster and less formal than a trial, it does limit the ability to appeal.

Opting to go to trial is a significant decision. It involves presenting your case in court, allowing a judge or jury to determine the settlement amount.

While potentially leading to a higher award, trials are time-consuming, costly, and uncertain. Careful consideration and legal advice are paramount when deciding how to proceed with a low settlement offer, balancing the potential benefits against the risks and costs involved.

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Both Sides Will Execute Releases

For many reasons, the at-fault party and their insurance carrier will not simply send you a check the moment a settlement is agreed upon. The insurance company must protect their driver from your claim, and that requires resolving the case before issuing the check.

Once your attorney reaches an agreement regarding your financial compensation, they will also need to negotiate the terms of the final release and settlement agreement. These documents are important, and they must avoid language that will come back to haunt you in the future.

The final release spells out that you forever waive your right to pursue this personal injury case in exchange for a monetary payment. The terms of the release will often make clear you waive your right to pursue this claim against any party.

Potential pitfalls can come with a release. Some insurance companies might include language that protects them from another party seeking compensation for the same accident. Your attorney could ensure that the terms of your release are in your best interest.

You Might Have Liens to Resolve

There are often third parties to deal with outside of the defendant and their insurance carrier. Depending on your insurance coverage, the medical providers who treated you after your accident could have a lawsuit against your settlement. This lien would cover the full cost of your treatment.

You must resolve all of the medical liens attached to your case before receiving your settlement funds. In some situations, your attorney could negotiate with your lienholders and resolve them at a discount. This means you could recover a larger portion of the total settlement amount.

The Insurance Company Will Send Your Attorney a Check

If legal counsel represents you, the other side will likely send your settlement check directly to your attorney. This is because if your attorney is operating on a contingency-fee agreement, they have a lien for their legal fees on your recovery.

Once your attorney has your settlement check in hand, they will deposit it into their trust account. This account is reserved for client funds and cannot intermingle with the funds of the law firm. Once all the liens are resolved, your law firm will collect their fee as a portion of your settlement. Once legal fees are paid, the final step is to forward a check to you.

What Is the Role of Insurers During the Settlement Process?

Insurance companies play a pivotal role in the personal injury settlement process, acting as the primary negotiators and payors in most cases. Their involvement begins the moment a claim is filed, where they evaluate the legitimacy of the claim, assess the extent of injuries, and determine the liability under the policy terms. 

The valuation of claims by insurance companies involves a detailed review of medical records, accident reports, and any other evidence that can shed light on the severity of the injury and the impact it has on the claimant’s life. They consider current and future medical expenses, lost wages, pain and suffering, and any other damages to arrive at a settlement amount.

Negotiation is a critical phase where insurance adjusters aim to settle claims for as low as possible to minimize payouts. This often involves a series of offers and counteroffers between the insurance company and the claimant or their attorney.

The process can be lengthy, requiring thorough documentation and sometimes tough negotiations to reach a fair settlement. Insurance companies’ strategies in valuing and negotiating claims are central to the settlement outcome, influencing the speed and amount of compensation received by the injured party.

Your Attorney Will Distribute Your Compensation to You

At the end of the process, you will receive a check from your attorney. This check will be less than the total settlement amount, as all of your expenses and legal fees will have been deducted previously.

The amount you recover reflects the full settlement minus attorney fees, court costs, liens, and other expenses. Receiving the settlement check marks the end of your personal injury case.

Structured Settlements vs. Lump-Sum Payments

Structured settlements and lump-sum payments are two primary methods through which personal injury settlements are disbursed, each with its own set of advantages and disadvantages:

  • A lump-sum payment grants the recipient immediate access to their settlement funds in one full payment. This method is beneficial for those needing to cover large expenses upfront, such as medical bills, rehabilitation costs, or debt repayment. It provides financial flexibility and the opportunity for significant investments. However, the major downside is the risk of mismanagement, leading to the potential for the funds to deplete quickly without providing for long-term needs.
  • Structured settlements disburse payments over a period, offering a steady income stream and reducing the risk of squandering the settlement prematurely. This method ensures financial stability and can be tailored to meet future needs, including ongoing medical care, education, or retirement planning. Structured settlements are particularly advantageous for people who may find it difficult to manage a large sum of money. However, they lack the flexibility of a lump-sum payment, as altering the payment schedule can be difficult.

Choosing between a lump-sum payment and a structured settlement depends on the individual’s financial situation, ability to manage funds, and their future needs.

Both options have significant implications for long-term financial security and should be considered carefully, possibly with the guidance of a financial advisor.

When Can I Get My Settlement Payments?

The timeframe for receiving settlement payments after reaching an agreement can vary significantly, influenced by several factors including the specifics of the agreement, the administrative processes of the involved insurance companies, and legal requirements.

Typically, once a settlement agreement is finalized, the payment process may take anywhere from a few weeks to several months. Most settlements stipulate a payment period within the agreement, often setting a deadline of 30 to 60 days for the disbursal of funds to the plaintiff.

However, several factors can extend this timeline. Procedural delays can arise from the paperwork and bureaucratic processes required to release funds from large insurance companies.

Additionally, legal requirements, such as the need to pay off liens from medical providers or to place funds in a structured settlement annuity, can introduce further delays. 

In some cases, if the settlement involves a minor or requires court approval, this can also extend the timeline for receiving payments. It’s essential for plaintiffs to have a clear understanding of these factors and maintain open communication with their attorney to manage expectations regarding the timeline for receiving settlement payments.

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Personal Injury Settlements and Taxes

In Florida, as in the rest of the United States, the tax implications of personal injury settlements are governed by both federal and state tax laws, with certain portions of the settlement potentially exempt from taxation. Generally, the Internal Revenue Service (IRS) does not tax the compensation received for physical injuries or sickness.

This means that the part of a settlement that directly compensates for medical expenses, pain and suffering, and physical injuries or sickness is typically tax-exempt. This exemption applies regardless of whether these expenses were previously deducted from one’s taxes.

However, the tax-exempt status does not extend to all components of a personal injury settlement. For example, compensation for lost wages or lost profit is taxable as it is considered a replacement for income that would have been otherwise subject to taxes.

Similarly, punitive damages, which are awarded to punish the defendant rather than compensate the plaintiff for losses, are also taxable. Interest on the settlement, accrued from the time the award was made until it is paid, is subject to taxation as well.

It’s important for recipients of personal injury settlements in Florida to understand these distinctions to comply with tax regulations and avoid unexpected tax liabilities. Consulting with a tax professional or a personal injury attorney can provide valuable guidance on managing the settlement in a tax-efficient manner.

After the Settlement, Keep These Tips in Mind

After receiving a personal injury settlement, it’s crucial to carefully manage and plan for the use of these funds, especially considering their long-term impact on the plaintiff’s life and financial well-being.

Initially, addressing immediate financial needs, such as paying off medical debts and other outstanding bills, should be a priority. However, it’s also essential to consider the future, particularly if the injury has long-term effects on earning capacity and quality of life.

We recommend creating a financial plan, potentially with the assistance of a financial advisor experienced in managing large sums. This plan should account for future medical costs, lifestyle adjustments due to the injury, and long-term financial goals.

Investing a portion of the settlement wisely can provide ongoing income and help ensure financial stability. Options might include diversified investment portfolios, retirement accounts, or education funds for children.

Understanding the potential tax implications of the settlement and planning accordingly is also important to optimize the financial benefit of the settlement. Additionally, considering the use of trusts or structured settlements can offer protection and ensure that the funds last as intended, especially for beneficiaries who might need financial guidance.

Ultimately, the aim is to ensure that the settlement serves its purpose: compensating for the injury and providing for the plaintiff and their family’s future, taking into account the unpredictability of life and potential changes in circumstances.

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Discuss Your Personal Injury Settlement with Our Law Firm

If you pursue legal action after an accident, it is helpful to understand how personal injury settlements are paid in Florida. Understanding the process could give you perspective on what your settlement might look like and how long it might take to resolve your case.

No one can predict with accuracy how your injury case will be resolved. However, the team at Bogin, Munns & Munns could evaluate your case and advise you on your best options for resolving your injury case. Call for your free consultation and answers to your personal injury questions.

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