Basic Personal Injury Settlement Breakdown: How Much Goes in My Pocket?
October 10, 2022 | Winters & Yonker, P.A.
The vast majority of personal injury claims settle out of court. You have probably heard of people who win significant settlements and asked yourself, “how much of that money actually made it into their pocket?”
The answer differs from case to case. Below is a discussion of the factors you need to consider if you want to estimate the amount of your settlement you can take home.
Forms of Compensation You Might Qualify for in a Florida Personal Injury Settlement
The Florida personal injury compensation system offers many different types of compensation, including:
- Economic damages: Medical expenses, lost wages, out-of-pocket expenses, and other easily quantifiable expenses.
- Non-economic damages: Pain and suffering, mental anguish, emotional distress, and other intangible harms.
A court might also award you punitive damages to punish the defendant for outrageous behavior, such as intentionally causing an accident in a road rage incident. Most of the time, courts deny punitive damages even to victorious claimants. Punitive damages are difficult to negotiate at the settlement table.
Deductions From Your Personal Injury Compensation
Add up your economic and non-economic damages, and you will have the amount of your gross compensation. To arrive at your net compensation, refer to the deductions and limitations listed below.
Personal injury lawyers generally work on a contingency fee of 33% to 40% of the total amount of your recovery. The opposing party will transfer your settlement into your lawyer’s escrow account, and your lawyer will deduct their legal fees before you see any of the money.
Your lawyer will also deduct their own out-of-pocket case expenses if they win your case.
Case expenses might include:
- Court fees, if you settled after filing a lawsuit
- Copying expenses (for medical records, etc.)
- Investigation expenses (travel expenses, etc.)
- Expert witness fees
- Other expenses that your case generated
Most personal injury lawyers will charge you nothing for case expenses if they don’t win.
Your medical expenses are likely to pile up before you receive any settlement money. Some healthcare providers are willing to deal with these expenses by taking a lien on your personal injury settlement, to be satisfied when the opposing party pays the settlement.
Generally, personal injury compensation is non-taxable. The IRS might tax you on the judgment interest on your settlement, but that will amount to very little. You might also sacrifice certain health-related tax deductions under certain circumstances.
The only major taxation you might need to concern yourself with would be if you won punitive damages. The IRS treats punitive damages as taxable income.
Inherent Limitations on Your Personal Injury Compensation
The following inherent limits apply to many Florida personal injury claims.
Insurance Policy Limits
All insurance policies have maximum coverage limits. No matter how strong your claim is, no insurance company has an obligation to pay you any more than this amount.
If the insurance coverage is insufficient to satisfy your claim, you can seek a second defendant (the defendant’s employer, for example) or go after the defendant’s personal assets.
Florida’s No-Fault Insurance System for Traffic Accidents
Florida applies a no-fault system to car accidents. No matter whose fault the accident was, you must rely on your own PIP insurance to pay your claim. PIP applies only to economic damages, including medical expenses and lost wages.
If your injuries are serious enough, you can exit the no-fault system and sue the defendant directly. The problem is that Florida does not require its drivers to carry liability insurance.
Florida’s Pure Comparative Negligence Statute
Pure comparative negligence is how Florida deals with situations where more than one party was at fault. Suppose, for example, that you suffer a slip and fall accident at a department store. The store’s escalator malfunctioned, but you were intoxicated at the time.
If you were in court, the court might find you 30% at fault and therefore deduct 30% from your awarded damages. At the settlement table, the parties are likely to negotiate a figure that approximates how a court would likely apportion damages among the parties.
Contact the Clearwater Personal Injury Law Firm of Winters & Yonker, P.A. for Help Today
A personal injury attorney cannot guarantee you a certain amount for your claim. Nevertheless, the Insurance Research Council estimates that personal injury victims with lawyers receive 3.5 times more total compensation than people who try to represent themselves. If you have a claim, start looking for a good lawyer today.
For more information, please contact Winters & Yonker, P.A. to schedule a free consultation with a personal injury lawyer in Clearwater today. We have five convenient locations in Florida, including Tampa, Clearwater, St. Petersburg, New Port Richey, and Lakeland.