Car accidents unexpectedly bring a great deal of uncertainty to the parties involved. One of the biggest questions includes how much to expect from a car accident settlement. If you’ve been the victim of a car accident, understanding how a potential settlement works can help. The following steps can be taken to maximize compensation when pursuing a car accident settlement.
How Do Car Accident Settlements Work?
A few simple steps can ensure the maximum compensation related to damages resulting from a car accident.
First, gather all medical records and bills. Then, create a method for documenting and tallying total charges or bills. Ensure that any amounts owed on these bills are included in this document.
If an individual has missed work due to injuries from the accident, lost wages will also play a role in potential settlements. Employers can provide wage and salary verification statements to prove lost wages.
Calculating the emotional distress and comparing your accident to other previous settlements also serves to give a baseline to begin negotiations from.
Keep in mind that all cases are unique and an experienced attorney can give you a clearer picture of what to expect when pursuing a car accident settlement.
What Factors Influence a Car Accident Settlement?
When calculating a settlement amount, the following two factors have the greatest influence on the amount:
- Injury severity
- Total amount the insurance company agrees to pay
Minor injuries will not garner amounts comparable to injuries suffered from more severe accidents.
Insurance companies, by their very nature, will attempt to pay the lowest amount possible for a claim. Having strong evidence to support your claim prevents a low initial offer.
What Factors Into a Car Accident Settlement Amount?
Three components of a claim make up the majority of context for determining an amount related to a car accident settlement. Those components include medical bills, lost wages, and pain and suffering.
Medical expenses include the bills already paid and balances accrued. Common practice centers around using settlement funds to pay for these expenses. In certain cases the bills must be paid upfront and out of pocket, with reimbursement coming later.
Settlements vary depending on the scope of medical expenses, such as:
- Length of time spent in the hospital
- Ambulance/emergency transportation usage
- The need for additional medical procedures or continuing long-term care
Any lost pay or wages from the inability to work influences the size of your claim. Demonstrating lost wages will require previous pay stubs or pay reports.
How Do I Claim Pain and Suffering from a Car Accident?
In order to claim emotional stress from injuries related to a car accident, you must have had a physical injury. You also have to justify the emotional damage suffered as a result of those physical injuries.
Pain and suffering examples include:
- Loss of enjoyment of life
- Inability to participate in former activities
- Decreased quality of life
- Loss of romantic companionship or friendship
How Can I Strengthen My Car Accident Settlement Claim?
While the above listed factors influence car accident settlement claim amounts, the following items can factor in to the validity of your claim:
- You went after medical treatment immediately, or waited several weeks
- The injuries sustained were all related to the accident, or if some were pre-existing conditions
- You sought treatment viewed beyond the normal scope of treatment for the injuries sustained
The best practice for situations involving car accidents remains seeing a doctor or medical professional as soon as possible in order to have an accurate assessment and timeline of your recovery process.
What’s the Average Settlement for a Car Accident Personal Injury Case?
The most common question related to car accidents is some variation of “How much is the average settlement for a car accident?” While there are averages and trends related to vehicle incidents, the final amount depends greatly on several factors. Every case is unique, which reinforces the need for an experienced attorney to assist in securing the proper compensation.
Annually, the cost of car accidents within the United States totals around $242 billion. These costs include small accidents (with minor or no injuries) up to catastrophic accidents resulting in life-long disabilities or death. A rule of thumb to follow when estimating any potential settlement would be to determine the extent of injuries sustained, any specialty medical needs, lost wages, and pain and suffering calculations to arrive at a baseline figure.
Many attorneys will advertise large settlement amounts, but those amounts fail to list the attorney’s fees, medical bills, or other expenses that go into the total settlement. Depending on your representation, the actual amount of money that makes it to the victim’s pocket can vary greatly.
How Long Does the Average Car Accident Personal Injury Settlement Take?
The length of time to reach an accident settlement depends on how quickly information related to the accident becomes available to all involved parties. Once everyone has had a chance to review the facts of the case, the negotiating phase can begin. Again, this process is dependent on many factors, including the representation used. Experienced attorneys with existing relationships may have the ability to expedite settlement negotiations.
The typical settlement process can conclude within a few months, or it can drag on for years if a case contains numerous complicating factors. Most cases settle somewhere between a year and 24 months on average.
Will I Have to Pay Taxes on My Settlement?
Unfortunately, the answer to this question has a great deal in common with the other topics. In short, it depends. A detailed explanation for the tax burden associated with accident settlements resides within the IRS code. The entire law is quite lengthy, but the high points are as follows:
- Gross income from damages resulting from physical injuries or sickness qualifies for exclusion from tax.
- Punitive damages do not qualify for exclusion, but must be counted
- Emotional distress damages only qualify for exclusion from taxation when attributed to physical injuries or sickness.
- When determining the taxable amount resulting from a settlement, the reason for receipt of the funds comes into play.
How Does Car Accident Settlement Money Get Taxed?
The following elements of a car accident settlement are eligible for taxation:
- Lost wages payments or lost profit payments
- Interest accrued on awarded funds
- Most punitive damages
- Emotional distress compensation
Lost wages received fall into a taxable category. This happens because the IRS considers earned wages taxable. Any compensation from a settlement used to offset the lost pay or wages must also be taxed.
An aspect of taxes due from settlements centers around the fact that if an amount received is large enough, higher tax brackets will trigger and less money eventually ends up in the claimant’s pocket. This applies in instances where someone receives compensation for several years or months of lost income.
Do I Pay Taxes on Money Used for Medical Expenses?
Any compensation for expenses related to medical treatment falls into the tax-exempt category, but an exception exists. According to the IRS:
“If you receive a settlement for personal physical injuries or physical sickness, you must include in income that portion of the settlement that is for medical expenses you deducted in any prior year(s) to the extent the deduction(s) provided a tax benefit. If part of the proceeds is for medical expenses you paid in more than one year, you must allocate on a pro rata basis the part of the proceeds for medical expenses to each of the years you paid medical expenses. See Recoveries in Publication 525 for details on how to calculate the amount to report. The tax benefit amount should be reported as ‘Other Income’ on line 21 of Form 1040.”
Need Help With A Car Accident Settlement? Contact Greenwald Law Firm Today!
As you can see, dealing with a car accident settlement poses a great number of challenges. In order to ensure that your rights are protected and you receive the compensation you deserve, partner with an experienced attorney. The Greenwald Law Firm has experience with car accident settlements and can assist you in getting the fund you’re entitled to. Call us today at (318) 219-7867 or visit our website and leave us an email. Contact us today for your free consultation.