What to Know About Personal Injury Settlements in California

Lawyers are mediating disputes and providing legal advice.California laws allow victims of personal injury accidents to file a claim against the person or entity that allegedly caused their injuries and damages. With the right legal representation and/or substantial evidence to prove fault, most personal injury cases settle out of court. 

However, every accident is unique, and the outcome will vary from one case to another. To ensure there are no surprises along the way, here is what to know about a personal injury settlement and how filing personal injury claims works.


The Process of Reaching a Personal Injury Settlement

When the initial personal injury claim is filed, the insurance of the person who was injured, referred to as a plaintiff, will contact the defendant’s insurance requesting a certain amount in damages. The insurance company of the defendant can either accept liability or dispute it. 

If the other party does not accept liability, then the plaintiff can work with a personal injury lawyer to seek the owed compensation, negotiating until a resolution is met. 

According to the US Department of Justice, about three-quarters of personal injury cases settle instead of going to trial; this would involve filing a lawsuit. Ultimately, settling before a personal injury lawsuit means: 

  • Agreeing to an offer
  • Signing a release
  • Receiving payment (through an attorney or directly)
  • Ensuring medical liens are cleared.


The Average Personal Injury Settlements

Close up of calculatorThe value of any personal injury case, whether that be a car accident, truck accident, motorcycle accident, or another type of personal injury accident, is incumbent on overall damages. 

“Damages” are considered any form of injury or loss the victim of the accident suffered. Common examples include: 

  • Current medical bills to treat injuries
  • Future medical expenses for long-term care
  • Lost wages for time spent out of work
  • Loss of earning capacity if put out of work due to injuries
  • Property damage
  • Pain and suffering
  • Loss of enjoyment of life

The accumulation and severity of these damages directly affect how much the plaintiff can recover from a personal injury settlement. On average, the median award for personal injury cases is $31,000.

However, some cases may be worth much more than the average. The most accurate way to determine case value is to consult with an experienced personal injury lawyer for a proper assessment and evaluation.


Is a California Personal Injury Settlement Taxable?

Pen on a Form W-2 Wage and Tax Statement for the US Treasury to be submitted by the employer in close up in a conceptual financial imageWhile most personal injury settlements are not taxed, there are exceptions under certain circumstances. The IRS tax code provides rules detailing which damages are considered taxable, which can be reviewed here

Generally Tax-Free

  • Pain and suffering: Damages for physical and emotional distress caused by the injury 
  • Medical expenses: Reimbursements for medical bills directly related to the injury

Potential Taxable Portions

  • Lost wages: Compensation for lost income due to the injury
  • Punitive damages: Additional awards intended to punish the guilty party’s egregious conduct
  • Property damage: If the settlement amount exceeds the fair market value of the damaged property

For the most reliable source in determining how much a case is worth and whether or not specific damages will be taxed for a settlement payout, consult with expert help from an experienced personal injury attorney.


How Are Personal Injury Settlements Paid Out?

Close up photo of a pen and blank dollar check. Shallow focusHere is an overview of the processes and procedures after agreeing to a personal injury settlement in California.

  1. Sign settlement release form: A release form will be prepared after accepting an offer, binding the plaintiff and liable party to a settlement agreement. This agreement also relieves the liable party from being sued in the future for the same accident.
  2. A check is cut: A settlement check is issued by the insurance company within 30 days of settling.
  3. Attorney’s fees paid out: If working with an attorney, the check will go to the law firm and legal fees are deducted from the awarded settlement.
  4. Negotiate medical bills: An attorney will negotiate medical bills or liens down, so clients are left debt-free. Any outstanding balances are paid with the final settlement.
  5. The client receives money: The agreed-upon funds are sent to the client after lawyer fees and liens are paid out.

Settlement Payment Options

Once a personal injury settlement is reached, plaintiffs are given the choice of selecting between two payment options: lump sum or structured settlement. 

A lump sum payment provides instant access to the full settlement, whereas structured payments allow for scheduled installments over a five-year period. 

One option is not necessarily better than the other. Obtaining the full amount may be difficult to gradually manage without spending it all, but structured settlements are available in smaller increments. 


How Long Does It Take to Reach a Settlement?

The amount of time it takes to settle a case will vary depending on the severity of the personal injury accident, ranging from weeks to months and potentially years. 

Additionally, the willingness of both parties to find a common ground affects turnaround time. The following facts can cause delays in settlement negotiations:

  • Incomplete or inaccurate documentation, which may include missing medical bills, proof of income, or accident reports
  • Multiple parties being involved, therefore, multiple insurance companies will be involved, as well
  • Liability is uncertain or evidence proving negligence is not clear 
  • No progress during negotiations because the other party is being uncooperative
  • Issues with court filings, appeals, or other unexpected legal hurdles


The Role of a Personal Injury Attorney to Reach a Settlement

The Statue of Justice symbol, legal law concept imageInsurance companies are businesses, not allies. They will try to exploit a victim’s situation, pressuring the injured individual into agreeing to a quick, but lesser payout. 

For instance, what may be presented as a “generous” offer may appear to cover current losses, but lack sufficient funding to cover future medical needs, lost wages, or the emotional turmoil suffered from the accident. 

An experienced personal injury lawyer levels the playing field, offering the following benefits:

  • Accurately evaluate a case: Assess the full extent of economic damages and non-economic damages to calculate the value of the personal injury claim 
  • Aggressively negotiate for maximum compensation: Because they understand the true value of a personal injury claim and have experience building cases, they will push for the highest settlement  
  • Protect your future: A dedicated law firm will ensure clients’ settlements cover not just current losses, but potential future needs, keeping their best interests in mind. 

At West Accident Law Group, we specialize in personal injury cases involving car accidents, truck accidents, Uber accidents, Lyft accidents, motorcycle accidents, and more. If you were injured in an accident, we can help you obtain the maximum personal injury settlement. 



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