Alanna Ritchie, Annuity.org Writer
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    Alanna Ritchie is a content writer for Annuity.org where her primary focus is on personal wealth management.

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  • Updated: April 25, 2022
  • This page features 3 Cited Research Articles
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APA Ritchie, A. (2022, April 25). Personal Injury Settlements. Annuity.org. Retrieved October 5, 2022, from https://www.annuity.org/structured-settlements/personal-injury/

MLA Ritchie, Alanna. "Personal Injury Settlements." Annuity.org, 25 Apr 2022, https://www.annuity.org/structured-settlements/personal-injury/.

Chicago Ritchie, Alanna. "Personal Injury Settlements." Annuity.org. Last modified April 25, 2022. https://www.annuity.org/structured-settlements/personal-injury/.

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A personal injury case arises when someone gets hurt and another person or company may be legally responsible for causing the harm.

Some of the most common personal injury cases include:
  • Medical malpractice
  • Products liability
  • Wrongful deaths
  • Workplace accidents
  • Defamation
  • Assault

However, the most abundant type of personal injury claims are automobile accidents — more than six million accidents are recorded annually.

Although the most obvious cases involve getting hit by a car or slipping on a wet floor, personal injury law covers much more than just literal physical injuries. Any damage to the physical, mental or emotional outlook of a person can be defined as a personal injury if the damage was caused by someone else doing something wrong or not doing something they should have.

Pro Tip
Negligence must be proved in a personal injury case.

For example, a personal injury may be a long-term illness caused by a toxic consumer product or as a side effect of a drug. It may even involve the suffering that comes from a person’s reputation being ruined.

To win a case based on negligence, the plaintiff has to prove four things:
Duty of Care
The defendant had a responsibility to be careful in the situation.
Breach of Duty
The defendant either did something wrong or did not do what they should have.
Causation
The defendant’s behavior caused the plaintiff’s injury.
Damages
The plaintiff has suffered as a result of the defendant’s reckless actions or failure to act.

How Do Injury Lawsuit Settlements Work?

In some cases, the process can be cut and dry. For example, when a car insurance company acknowledges their insured client as the one at fault, then an injury settlement can be more easily obtained.

In fact, only a small portion of personal injury cases actually reach a courtroom. Most cases are settled out of court, which means that instead of spending time and resources bringing a personal injury suit to trial, the involved parties (usually the lawyers for the plaintiff and defendant) reach an agreement for how much money the plaintiff should receive as compensation.

Before negotiations begin, the plaintiff must formally file the lawsuit, and then the defense attorney must be given adequate time to perform all pretrial explorations and research. The magnitude of the injury case determines how the rest of the suit will progress. In smaller instances, the two opposing lawyers will simply negotiate back and forth until the plaintiff chooses to accept an offer from the defense.

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In many cases, the defense attorney is representing an insurance company. If the insurance company does not feel ready to begin earnest settlement discussions, then the case will come to a standstill. However, if you were injured by someone, and you find yourself waiting on their insurance company’s response, have no fear: Your attorney should know this often is a good thing.

Defense lawyers and insurance companies use this strategy to test the plaintiff’s willingness to settle. You do not want to seem too eager, because this will let them know they can lower their offer. Every case is different, and it’s not uncommon for personal injury claims to take months or years to resolve. Patience isn’t just a virtue — it can also be the key to receiving a fair and just settlement.

How Does a Structured Settlement Work?

Personal Injury Settlement Payouts

It’s important to remember that a cash settlement’s purpose is to make one “whole” again. The goal is not to put the plaintiff in a better financial position, but to cover the out-of-pocket expenses they have accrued as a result of the incident and give them the money they need to cover future expenses and restore as much normalcy to their life as possible.

Some important questions to consider prior to distributing payment include:
  • How much of the payout will contribute towards legal fees?
  • Will the plaintiff consider a partial settlement?
  • What is the minimum monetary amount they will accept to avoid trial?

If you or someone in your family are injured due to someone’s negligence, it is imperative to contact an attorney as soon as you can so they can begin properly documenting all treatments, procedures or surgeries immediately.

Pro Tip
Make sure you document all expenses related to the injury.

However, predicting future and long-term needs is just as important, if not more important, than tallying the cost of medical care already received. Treatments such as physical therapy and chiropractic visits can continue for years after a serious injury, and sometimes for a lifetime.

Keep these factors in mind when deciding on a proper settlement value:
  • Medical bills accumulated
  • Length of medical treatment
  • Amount of lost income
  • Long-term treatment or post-accident treatment
  • Receiving a long-term diagnosis
  • Possible pain and suffering damages

In addition to determining the fair cash value of the settlement, be sure to explore the different payment options. Many personal injury settlements come in the form of a structured settlement, which can provide you a steady stream of tax-free income for many years to come. Structured settlements are usually paid through annuities, which are owned and administered by life insurance companies.

If a disability leaves you unable to work, the bodily injury settlement you receive will have to replace your income. Even if you expect to return to work after you recover, make sure you consider whether the long-term effects of your injury may force you to retire early. A structured settlement can be designed to begin sending you periodic payments once you reach a certain age.

Make sure you and your team fully explore the long-term significance of your injury, so that the offer you accept includes money set aside for possible future expenses. Once a personal injury payout has been awarded, the only way to access the money ahead of schedule is to sell future payments on the secondary annuity market.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: April 25, 2022

3 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. American Bar Association. (2013, March 18). Personal Injury. Retrieved from http://www.americanbar.org/groups/public_education/resources/law_issues_for_consumers/injury_settle.html
  2. Boeschen, C. (n.d.). Advantages of Settling a Personal Injury Case. Retrieved from https://www.alllaw.com/articles/nolo/personal-injury/advantages-settle-lawsuit-out-court.html
  3. Tikriti, A. (n.d.). How to Negotiate a Personal Injury Settlement. Retrieved from https://www.alllaw.com/articles/nolo/personal-injury/how-to-negotiate-settlement.html