Questions & Answers / How is the money distributed when settling a claim?

How is the money distributed when settling a claim?

Kevin Fine

(480) 344-4993

Various parties will be owed once the claim is settled.

Generally, when you settle a claim, it is truly over. You cannot reopen the claim if you have a flare up of your injuries or a more serious condition develops after settlement. The insurance company will require that you sign a release of all claims to assure that you cannot reopen the claim. Your settlement draft (check), will show a total amount paid on the bodily injury claim. The auto accident settlement amounts will not generally categorize what amount was specifically for pain and suffering, medical bills, or wages. Everyone that is owed money from the case will be paid from those proceeds.

Medical Bills and Liens

You will need to satisfy unpaid medical balances from the settlement amount as well. Doctors will often work with you to reduce their bills if necessary to leave you a reasonable amount. If the insurance policy is small and the medical bills high, the only way for you to come out with any money is to get the medical bills reduced. Sometimes the battle to get the medical balances lowered is significant and can be complicated.

The law in Arizona allows a medical provider to file a “lien” against your claim with the county recorder’s office, in order to protect their right to collect for any unpaid medical bills. This lien will often result in the medical provider’s name actually appearing on the settlement draft with yours, and your attorney’s if you have one. It is highly advisable to have any needed reductions agreed upon before you reach settlement with the insurance company.

Legal Fees and Costs

If you hire an attorney, the fees and costs will be taken from the settlement proceeds. If your attorney is working on a contingent fee contract (as we do) that means the fee is “contingent” upon success of the case. If your attorney is not successful in obtaining a settlement or judgment for you, you pay no attorney fees under a contingent fee contract. Costs of a case are different from fees. Costs are monies paid for goods and services that are separate from your attorney’s time. For example, most medical providers will charge a fee for providing a copy of your medical records. This is considered a “cost.” So is the filing fee paid to the court to start a lawsuit. Such costs are usually paid by your lawyer, but the client is legally responsible for the costs, so they are tracked and taken out separate from the attorney’s fees. The costs in most personal injury cases are quite low if the case settles. Once in litigation, the costs can become a significant factor. Although your attorney may be paying these up front, the costs will ultimately affect what you get out of the claim, so make sure you understand them and approve them.

The percentage of the settlement or judgment that attorneys charge does vary slightly, usually between 25% to 50%, depending on the type of case being handled. Be sure to understand what your attorney’s contract includes. We have two common practices that we believe have helped us have happier clients: First, we try to only take cases where we believe our clients will be better off for our services. That means we fully believe that they will get more money in their pocket at the end of the claim than they would without our help. In addition, we have saved them a lot of work and stress. Our second policy is related to the first–we try to make sure our client is getting a fair amount from the settlement or judgment. This does not happen in all law offices.

Your Compensation

After medical bills, legal services, and anyone else that has a legitimate claim on the proceeds have been paid, you keep the remainder for a non-economic damages award (pain and suffering) and lost income. This is the figure that matters the most to you and is the hardest to protect in the process of Arizona injury insurance settlement. Here is our biggest sales pitch for hiring an attorney. If you handle a claim on your own, take all the necessary steps to resolve your property damage and bodily injury claim with the company yourself, and don’t spend one penny on an attorney, you are obviously better off, right? Not necessarily, and not usually. If at the end of that process you have $7,000 left for yourself, but with the help of an attorney, even after paying him or her, you would have had $25,000, you are worse off in two ways. First, you had to do the work and, second, you have considerably less money in your pocket. This is just hypothetical, but such ranges of improvement happen all the time in smaller auto cases and the percentage increases are even more pronounced in serious injury cases. We will not take a case unless we believe that we will make our client better off financially for our services, even after he or she shares a percentage of the settlement or judgment with the firm.