Being seriously injured due to someone else’s negligence is a traumatic experience. The process of negotiating a personal injury settlement with an insurance company can be complicated enough without even considering what is due to other organizations once the settlement is paid. Unless the individual has hired a lawyer who represents clients in personal injury cases, some financial aspects may come as a surprise.
Reimbursing Health Insurance and Paying Lawyer Fees
For instance, although it might seem obvious to some people, not everyone realizes that when health insurance has covered medical expenses, the insurer expects to be reimbursed from the settlement. If the individual has hired a lawyer, the attorney also is paid from the settlement. Depending on the arrangement of the compensation, the person may now have enough money to cover all the lost wages and any expenses that were not covered by insurance.
There may be tax implications as well. The Internal Revenue Services does not tax money received to compensate for observable physical injuries but does expect to be paid if any compensation was for intangible factors. This means if compensation was paid for pain and suffering, the IRS considers that part of the settlement taxable. The lawyer will be able to explain this further and may refer the client to a tax accountant.
Negotiating Reasonable Compensation
Another reason it’s important to have professional legal representation with an organization like Barbera Law is if the insurer refuses to pay reasonable compensation. That is more likely when there is no attorney working on the negotiations. Insurance companies are more inclined to offer adequate compensation when adjusters have discussions with a plaintiff’s attorney since they don’t like the risk of going to court.
Pre-Settlement Funding and Structured Settlements
If the negotiations are dragging out for longer than the client wants, an attorney can provide information about obtaining money through pre-settlement funding. Another financial issue that may occur is the insurance company only being willing to pay through a structured settlement. That means it would make several payments over time instead if one lump sum. Some companies buy these settlements, giving the person the chance to have all the cash now minus the service fee.