What is a Personal Injury Settlement Used For?
Personal injury settlements can be used for various things, including paying medical bills and pursuing a lawsuit. However, the total settlement amount is often reduced by amounts owed to third parties, including health insurers, medical providers, lawsuit loans, and other claims for reimbursement. For example, health insurers are typically entitled to reimbursement of covered medical expenses, but sometimes they will also have a claim for underinsured motorist benefits (UIM).
Per Diem
Per Diem, a Latin term that means per day, is the method used to calculate pain and suffering damages in Personal Injury Settlement. This method assigns a dollar amount to each day the injured person is in pain and suffering and is based on the extent of the injuries. For example, a person suffering from a car accident might be in pain for eight weeks while wearing a cast and attending physical therapy.
The per diem method is a less common method than the multiplier method. This method assigns a certain amount of money to the pain and suffering suffered by the plaintiff each day from the accident until the plaintiff reaches the maximum recovery. The per diem method is not required by law, so insurance companies can use it if they choose to.
Structured Settlements
Structured settlements for personal injury cases are a great way to protect the injured party from losing their award. A structured settlement is especially helpful when the plaintiff does not have a good track record of managing large amounts of money. The goal of a structured settlement is to replace an injured party’s earnings over time and cover ongoing medical costs. In addition, it will also compensate the injured party for pain and suffering.
A structured settlement is a legally binding contract wherein the defendant agrees to pay a plaintiff in installments over time. These payments are guaranteed by the defendant’s insurance company, which means the payout will not fluctuate with market fluctuations. A structured settlement can also help an injured person avoid the temptation to spend large sums of money in one lump sum.
Insurance Coverage
If you’ve suffered a personal injury and you’re considering filing a lawsuit, you need to understand insurance coverage in a personal injury settlement. Typically, an insurance company will limit the amount of money they will pay to settle your claim based on the policy coverage. The maximum amount they will pay depends on the coverage and limits of the policy and the insurance company’s finances. For example, a large corporation, business, or individual will likely have more coverage and higher limits on their policy.
As a result, you should have a thorough collection of evidence to back up your case. It includes medical records, x-rays, wage loss verification, and business income records. In addition, you should include anything that your insurance company would need to accept your damages over and above the policy limit.
Taxes
Taxes are used for personal accident settlement in several different ways. For instance, any damages for emotional distress are taxable. However, these damages are not taxable when the damages are related to an actual physical injury. Any award for emotional distress must be tied to an injury or sickness. Depending on the situation, the money may be tax-free. Regardless, the taxes may affect your settlement’s monetary value.
The amount of taxes you will pay depends on the size of your injury settlement. Some personal injury settlements are significantly larger than others. It is important to state this in the settlement agreement. Otherwise, the IRS may challenge the non-taxability of your settlement. Fortunately, if you can allocate your settlement, you have the best chance of exempting most of it.
Limits
Many factors will affect the amount of a personal injury settlement. One factor is the insurance coverage of the defendant. If the defendant has millions of dollars of insurance coverage, the settlement may be limited to that amount. A personal injury attorney can help you understand how to maximize your settlement based on the insurance policy limits.
The circumstances surrounding each personal injury case are different. In addition, each victim has their characteristics. For example, two individuals may break their leg in the same accident, but one may require more treatment and a longer recovery time than the other. Factors such as age, pre-existing medical conditions, and compliance with treatment plans all play a role in the recovery process.
