Posted on Saturday, May 20th, 2023 at 12:00 pm
One of the most common questions about personal injury cases in Washington State is, “When do I get my money?” The answer is that most cases end in a settlement agreement between you and the insurance company for whoever caused your injuries. But if you don’t know legal jargon, you might not know what the term “settlement” means or how a settlement is paid out. Our Lakewood personal injury attorneys can handle your case on your behalf, but you have the right to know what a settlement is and how you’ll receive your compensation. We created this guide to explain how personal injury settlements are paid out and address some other questions you might have. We hope you find it useful.
What Is a Settlement Agreement?
Let’s start with the basics: What is a settlement agreement? It’s a legal contract between you and an insurer that says you release the insurance company from further liability in exchange for paying you compensation. In other words, the insurance company will cut you a check in exchange for you giving up your right to file additional claims against them. A settlement agreement typically marks the end of the formal legal process in a personal injury case, though it can take a while before you receive your compensation.
Lump Sum vs. Structured Settlement
Personal injury settlements come in two forms: Lump-sum payments and structured settlements. Let’s take a closer look at both options, so you can better understand how they may apply to your case.
- Lump Sum Payment: This is the most common way to receive a personal injury settlement. In this scenario, you receive the total settlement amount at once. This can be particularly helpful if you have substantial immediate costs, such as hefty medical bills or living expenses while you’re out of work. But remember, it’s essential to manage these funds wisely, as they need to cover all your future needs related to the accident.
- Structured Settlement: In a structured settlement, the total amount is paid out over time. This could mean monthly or yearly payments over several years or involve smaller initial payments that gradually increase. The payment schedule is typically decided during settlement negotiations. This option provides a sustained income over a more extended period and can be a wise choice if long-term medical care or loss of earning capacity is a concern. One thing to note is that once you agree on the terms of a structured settlement, you generally cannot change them.
When Do You Receive Your Settlement Check?
Make no mistake, agreeing on a settlement is a significant step in a personal injury case, but you might not receive your compensation immediately. Here are the steps that generally have to happen before you can cash a settlement check:
- Signing the release form – After you and the other party agree on the settlement amount, the next step is to sign a release form. This document says you won’t pursue the party at fault or their insurer for more money later.
- The insurance company sends a check – With the release form in their possession, the insurance company will draft a check with the agreed-upon amount and send it to your attorney. Although the check bears your name, it goes to your legal team first. They’ll scrutinize everything, ensuring the payout is correct and as promised.
- Depositing the check – Once your attorney receives it, they’ll deposit it into a dedicated legal trust account. This move helps secure your money while you and your lawyer wrap up your case. However, it’s important to note that this account does not accumulate interest.
- Settling debts – While your case was ongoing, you may have received treatment without paying medical bills immediately. You might have other debts as well. Your attorney will now step in to discuss and settle these debts on your behalf. It’s worth noting that this step may require some patience, as there can be a lot of negotiating until all your creditors are on the same page.
- Paying your lawyer and receiving your compensation – Once all your medical debts and other expenses are accounted for, it’s time for your lawyer to wrap up your case. You’ll meet your attorney to review your settlement packet, including your release and records of all paid expenses. After you’ve reviewed and signed all the final documents, your attorney gets their fee from the settlement. Then, you receive the remaining amount.
How Long Does it Take to Receive a Settlement?
After you sign the release form typically takes about four to six weeks before you receive your compensation. However, it’s essential to remember that this timeline is not set in stone. For example, the time the insurance company takes to process the release, write the check, and send it to your attorney can vary. Furthermore, negotiating with medical providers to pay off liens can add time.