After being in a severe accident that is not your fault, you might consider your options for filing a legal claim against the at-fault party.
After all, you did not cause the accident, but now you have medical costs, cannot work, and it is harder each day to pay your bills.
Luckily, the law recognizes the damage done by these accidents and allows victims like you to receive compensation from the at-fault party for your injuries and associated costs. While most of these cases settle out-of-court, you might wonder how the process works, or who pays your compensation.
Who Pays for West Palm Beach Car Accident Settlements?
You have three potential sources for your accident compensation. Sometimes one party pays the entire balance, while at other times, two sides share the costs.
The Insurer of the At-Fault Party
In most car accident claims, the at-fault party’s insurance company pays the settlement. That is one of the reasons why Florida requires automobile insurance. It protects the party at-fault for the accident from financial ruin but also ensures that the victim receives the compensation they need to cover their injuries and losses.
Insurance policies have limitations for how much they pay out – and this is based on the coverage value purchased by the driver. Most drivers in Florida are grossly underinsured, which means they are buying state minimums – which are rarely enough to cover catastrophic injury claims.
The At-Fault Driver
The driver at-fault for the accident may pay for a personal injury settlement from their assets under two situations:
- When the settlement amount is greater than the policy value. In this instance, the insurance company pays out the settlement value up to the policy maximum. For example, the settlement award is $120,000. The insurance policy covers up to $100,000. The remaining $20,000 would come from the insured’s assets.
- When the driver has no insurance. Sadly, many motorists in the state have no insurance. While it is illegal, their breaking the law does not help you when you suffer an accident. Your attorney will assess their assets and look for ways to collect even without insurance – such as seeking a judgment and garnishing wages.
Your Insurance – Personal Injury Protection Coverage
In Florida, you are required to carry Personal Injury Protection (PIP). In catastrophic accident cases, PIP insurance quickly runs out.
If the other party has no insurance, or their insurance company does not pay or you exhaust the amount of available insurance coverage from the at fault party, you may need to use your own uninsured motorist coverage.
You pay premiums to your insurance company in the event someone without insurance, or too little insurance coverage causes an accident. Therefore, you have the right to request compensation from your insurance company for your damages.
How Do You Collect Your Settlement?
Collecting a settlement depends on how the agreement was reached. Your attorney has been negotiating with the insurance company during the claim process and might have started negotiations long before a lawsuit was filed.
If you settle during negotiations, the insurance company writes a check for the agreed amount. You must sign a release stating that after receiving the check, you relieve the insurance company of any future damages in the case.
When you sue the defendant directly, such as in an incident where the driver has no insurance, collecting your settlement is more complicated. If you receive an award at trial, you receive a judgment from the court. The judgment states the defendant owes you a specific amount.
The defendant may have the funds to pay for the accident settlement, and your attorney will request a bank-issued check in the settlement amount.
Other times, your attorney will need to go to court to enforce the judgment, which might include garnishing the at-fault party’s wages, requiring monthly payments until the settlement is satisfied, or forcing the defendant to liquidate. Often this part is more complicated, because your attorney must find ways to enforce a settlement – and sometimes the defendant does not have the assets to pay it.
What about Taxes on Settlement Funds?
In most cases, taxes do not apply to personal injury settlements. However, the Internal Revenue Service only exempts compensation associated with physical injuries and sickness. If you do not claim your medical expenses as a deduction on your taxes, then you should not owe the IRS for your injury settlement.
If, however, you claim your medical expenses, then you may owe the IRS for the money saved with deductions.
There are also three other circumstances that allow the IRS to tax your injury settlement:
- If any portion of the injury compensation includes “interest.”
- If your injury settlement includes pain and suffering, then the portion of your compensation that involves pain and suffering damages is taxable.
- Lastly, punitive damages are not tax exempt. These damages are not meant to make you financially whole or repay for medical expenses. Therefore, the additional money received via punitive damages can be taxed, and you must report under “other income” on your tax return.
Speak with an Experienced Attorney about Your Car Accident Case
The process of collecting compensation and finding sources for compensation is complicated. Therefore, it is best that you speak with an attorney about your injury case. Your attorney can better decide where the payment will come from and what methods they can use to collect compensation. Your attorney can also advise you on potential taxes you may owe to the IRS for your settlement.
To explore what is available to you, speak with a skilled injury advocate from the Law Offices of David M. Benenfeld P.A P.A We can help you explore your options for compensation today. Schedule a free, no-obligation consultation by calling 954-677-0155 or request more information online.