What are "damages"? Which should be included in my settlement?

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In personal injury parlance, the different kinds of compensation you can receive are divided into two main groups: general damages and special damages. General damages are also sometimes called "non-economic" damages, and special damages may be referred to as "economic."

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Basically, general damages are the kinds of harm and losses that stem from the underlying accident or injury, but are not easily quantified and can be more subjective. This includes compensation for any pain and suffering, loss of enjoyment of life, lost companionship, disfigurement, and similar harm caused by the accident and resulting medical treatment.

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Special damages are losses that are easy (or easier) to quantify (put a dollar figure on, in other words). This includes compensation for medical treatment, lost wages, lost income opportunity, property damage, and other economic losses resulting from the accident, medical treatment, and any resulting disability or limitation.

 

Should I get money for "pain and suffering" in my settlement?

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If you were injured in an accident, and you were not at fault – or at least, not "mostly" at fault – you should receive some amount of money for your pain and the impact the injury has had on your daily life. In accidents with minor, short-term injuries, it may be a small "token" amount. When injuries are more serious, painful and/or long-lasting, the settlement of the pain and suffering portion of your claim increases sharply.

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Are my medical bills paid in an injury settlement?

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Yes, payment (or reimbursement for payment) of medical bills will be a component of any settlement that is reached in an injury-related insurance claim or lawsuit. The plaintiff/claimant will be compensated for all medical treatment necessitated by the accident. That includes reimbursement for medical bills already paid, and a plan for payment of all future medical treatment that will be necessary.

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One thing to be aware of when it comes to getting compensation for medical bills that have already been paid: Your health insurance provider may have a lien on part of your settlement, if your provider already paid some or all of the bills that you later get compensated for.

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Is there a minimum personal injury settlement amount?

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No, there is no minimum or maximum amount when it comes to injury settlements. Every case is different in terms of strengths and weaknesses, and what is at stake. The amount of a settlement in a personal injury case depends on a whole host of factors, including:

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• the nature and extent of the plaintiff/claimant's injuries, including "pain and suffering" and the long-term impact of the injuries

• the clarity of who was at fault for the underlying accident, and

• the willingness of one side or the other to play "hardball" and let the case go to court if need be.

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Can I reject a settlement offer?

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Absolutely. If you've filed an injury claim with an insurance company, or brought a personal injury lawsuit against the person who caused your injuries, you're free to reject any settlement offer you receive.

It's true that most injury cases settle before going to trial, and a large number of claims even get resolved before a personal injury lawsuit is filed. But there are a number of valid reasons to reject a settlement offer and take the case to court. Maybe you and the other side are too far apart on key issues like who was at fault for the accident, or the extent of your injuries. Maybe you just want your "day in court."

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Having said that, it's wise to take a reasonable approach to any settlement offer, and to formulate a strategic response. Talk to your attorney about the best course of action. Most often, when an injured person rejects a settlement offer, settlement negotiations continue. The injured person (called the "claimant" or "plaintiff") typically makes a counter-offer, usually as part of a methodical and professional demand letter.

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The demand letter is your chance to tell your side of the story. How did the accident happen? What evidence points to the defendant bearing the blame for what happened (police reports, witnesses, etc.)? How badly were you injured? What has been the course of your medical treatment so far, and what is the prognosis for future treatment?

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In your demand letter, you'll present detailed evidence that will show why the other side's initial settlement offer is too low, and you'll end your letter with your own "demand"-- a dollar amount you'd be willing to accept to settle the case.

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How is my lawyer paid?

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In most personal injury cases, if you decide to retain a lawyer to handle your case, he or she will represent you under a contingency fee. This means that you do not pay anything "up front", and your lawyer will only be paid if your case reaches a favorable solution for you -- either through an agreed-upon settlement or after a civil court trial.

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Then, your lawyer will collect a percentage that was agreed-upon in the initial fee agreement you signed. Typically, this percentage is around 33.33 percent of the settlement amount, or 40% if you go to trial but many fee agreements spell out that the percentage.

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How do I collect my personal injury settlement?

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It depends on the specifics of your case. If the defendant had an insurance policy that kicked in to cover the accident, chances are that you (or your attorney) have been negotiating with the insurance carrier; either before you ever filed a personal injury lawsuit, or while the lawsuit is ongoing. In that case, the insurance company will usually just write a check for the agreed-upon amount and you will sign a release that absolves the insurer and the defendant of any further liability in connection with the incident that gave rise to your claim.

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If you sued the defendant directly and there is no insurance coverage in play in the case, things can get more complicated, especially when your case has gone all the way to trial and you've received a judgment in your favor (which includes an order that the defendant pay you a certain amount in damages). Getting a judgment is one thing, but getting your money is another, and it will be a challenge if the defendant does not have much in the way of assets.

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Will I need to pay taxes on my settlement money?

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The IRS has provided some guidance on this issue, but it all comes down to what the settlement covers. If the settlement is intended to cover "physical injuries or physical sickness," then the award will not be taxable as income, as long as you didn't previously claim any "medical expense" deductions related to that same injury or illness.

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Assuming you didn't claim such a deduction, you don't need to claim any part of the settlement as income for federal income tax purposes. But if you did claim a deduction involving the same injury or illness that gave rise to the settlement, then you'll most likely need to report the settlement as "Other Income" to the IRS.