Many people see headlines involving large settlements or verdicts but do not realize that several deductions may come out of a settlement before the injured person receives their final portion.
Every case is different, and there is no universal formula for determining exactly how much goes in your pocket. The sections below discuss how personal injury settlements break down and what to expect from your award.
Personal Injury Settlements Usually Include Several Types of Damages
Personal injury settlements are intended to compensate victims for losses caused by another party’s negligence.
Depending on the case, your compensation award may include money for:
- Medical expenses
- Future treatment costs
- Lost wages
- Reduced earning capacity
- Pain and suffering
- Emotional distress
- Permanent disability
- Property damage
The total settlement amount represents the overall value of the claim before deductions are made.
Cases involving catastrophic injuries often result in larger settlements because the damages are so extensive. Injuries (e.g., traumatic brain injuries, spinal cord injuries, etc.) that involve future care or result in lost earning capacity and pain and suffering generally have the highest value.
Attorney’s Fees Often Come Out of the Settlement
Most Arizona personal injury lawyers work on a contingency fee basis. This means there are no upfront attorney’s fees, and your attorney only gets paid if they recover compensation for you.
Attorney’s fees are usually a percentage of any award recovered, with the exact percentage depending on the fee agreement and whether the case settles early or proceeds into litigation.
Personal injury cases also involve expenses necessary to build and pursue the claim. These range from filing fees and investigation expenses to expert witness fees and deposition expenses. The attorney-client agreement typically explains how these costs are handled and whether they are reimbursed from the settlement.
Medical Liens and Unpaid Bills May Need To Be Paid
In many injury cases, health insurance providers and hospitals may assert reimbursement rights or liens against the settlement proceeds.
For example, if health insurance paid accident-related medical bills, the insurer may later seek reimbursement from the settlement. Some providers may also agree to delay payment until the case resolves; those balances may be deducted from the settlement afterward.
In many cases, attorneys negotiate these liens to help maximize the client’s final recovery.
Shared Fault Can Reduce Your Compensation
Arizona follows a pure comparative negligence system. This means an injured person’s compensation may be reduced by their percentage of fault.
For example, if you have a $100,000 settlement but are found to be 20% at fault for your injury, your recovery could be reduced to $80,000 before other deductions. Insurance companies frequently attempt to shift blame to reduce settlement exposure.
Are Personal Injury Settlements Taxable?
Many injury victims are surprised to learn that taxes may affect certain portions of a settlement. In general, compensation received for physical injuries or illness is often not considered taxable under federal law. However, some parts of a settlement may be treated differently.
For example, compensation for lost wages may have tax implications, and punitive damages are often taxable. Interest that accrues on a judgment may also be subject to taxation. Because every settlement is structured differently, the tax consequences can vary depending on the nature of the damages being paid.
Settlement Statements Show the Breakdown
At the conclusion of the case, attorneys typically provide a settlement breakdown showing the following information:
- Total settlement amount
- Attorney’s fees
- Litigation costs
- Medical lien payments
- Final client recovery
These settlement statements help clients understand how the award is being distributed and what goes into their pocket after deductions.
Contact an Experienced Phoenix Personal Injury Lawyer at Feller & Wendt, LLC for Help Understanding the Value of Your Case
There is no automatic or average amount that injury victims take home after settlement; every case involves different injuries and damages. The best way to understand how much money you can recover after a personal injury accident is to consult an experienced Arizona personal injury attorney.
Your attorney can help evaluate the likely value of the claim, explain how settlement proceeds are distributed, and work to maximize your recovery after an accident. Call Feller & Wendt, LLC to schedule a free consultation.
Schedule a free case evaluation with our team today. We proudly serve Layton, St. George, Salt Lake City, Phoenix, Mesa, Meridian, and its surrounding areas.
Feller & Wendt, LLC – Layton Office
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Feller & Wendt, LLC – Mesa Office
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Feller & Wendt, LLC – Meridian Office
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Meridian, ID, 83642
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