Good news! After fighting the insurance company and forcing them to do the right thing or see you in court, they finally cave and decide to pay you what your case is worth to settle. But now that it is settled, how much of the settlement is going to go to you? In other words, what's your take home from this whole ordeal?
Typically, personal injury cases have five categories that settlement proceeds are directed to:
What are attorney fees?
In almost 100% of injury cases, the attorney's fee is set as a percentage of the recovery obtained. In most cases, this percentage is either 1/3 or 40% of the total recovery.
What are case expenses?
In most injury cases, case expenses are advanced by the attorney representing the injured party with a provision in the fee agreement that the attorney is reimbursed for these expenses in the event of a recovery.
What are health insurance subrogation interests?
If an injured party had health insurance that paid for the medical treatment associated with the accident, that health insurance carrier will likely have what's called a right of subrogation. In other words, you have to pay the health insurance carrier back the money that it paid for your medical treatment. (FYI: Dealing with subrogation interests can get very complicated very fast. Make sure your attorney knows how to handle, and has handled, subrogation before he or she closes your file.)
How much goes to medical provider bills?
If you don't have health insurance or if health insurance has not covered some of your treatment, many times you will end up owing your doctors or hospitals for the treatment that you received. If it is a hospital, they may file what's called a hospital lien against you and your case. If it's a doctor's office, they may put your case in to collections. Make sure your lawyer is addressing these outstanding bills and that you understand what if any bills are still owed before your lawyer closes you file.
How much goes to you?
After fees, expenses and healthcare bill related matters, the remaining money from your settlement will go to you. For many types of injury case settlements, there are no income or other taxes applicable. However, make sure with your attorney and/or accountant that this is the case before you spend all of your settlement proceeds.