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Who Pays The Money In A Personal Injury Settlement?

When watching television shows or movies about someone filing a personal injury lawsuit, there is sometimes a scene where people are cheering when the plaintiff wins their case. Everyone is happy because the negligent party was in the wrong, and now the complainant can collect the funds owed them in their settlement.

The unfortunate truth is that collecting money from a personal injury lawsuit is far from easy, or cut and dry. Winning the court case in a personal injury lawsuit is only half the battle. When it is over, there is still the next step of actually collecting the funds.

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Using Insurance In A Personal Injury Settlement

One of the blanket statements people who are not lawyers make when they are asked about collecting funds from a personal injury lawsuit is that the plaintiff can just get the money from the defendant’s insurance coverage. Once again, this position simplifies a situation that is actually much more complicated than most people realize.

Insurance coverage can come into play in almost any type of personal injury lawsuit, but every state has its own laws when it comes to dealing with insurance. For example, a personal injury court proceeding in the state of Missouri will end in a mistrial if either side mentions the word “insurance.” The courts don’t want to even hear that word, and that is the case in many states. Personal injury cases involving property damage, car accidents, or injuries are often covered by some sort of insurance, but that does not mean that it will be easy for the injured party to get paid.

What Happens If Insurance Does Not Cover Costs?

If someone is getting sued in a personal injury case as the negligent party, then the negligent party’s insurance company must be alerted to this immediately. The insurer may take care of the costs of the case and attempt to negotiate a settlement with the plaintiff. If the case goes to court, then the insurance may cover those costs too.

But what if the court awards a settlement of $500,000 and there is only $250,000 worth of insurance? What if the insurance company determines that the property owner was not covered for the type of personal injury they are being sued for? The fact that a person or entity has insurance does not guarantee that the person who has been wronged will be able to collect their settlement. All it means is that the chances of getting a settlement are better, but only slightly better.

When Insurance Is Not Involved

So, what about those situations where insurance is not going to cover the costs of a personal injury lawsuit altogether? That means that the defendant or the injured party will have to go about collecting funds on their own, and that could be a big problem for the plaintiff. The biggest threat is that the defendant could go bankrupt after the personal injury ruling is given. If that happens, then there is a good chance that the plaintiff will never see a dime of the money they may have subsequently won.

Each state has a list of property that is exempt from being part of a personal injury lawsuit. That means that even if the complainant wins a lawsuit against a defendant, they still cannot lay claim to some of their property or assets in order to get paid. More than likely, assets such as houses are protected. If the unprotected assets do not equal what you have been awarded, then payment is less likely to occur.

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In a perfect world, the defendant has a job or a savings account that can be garnished to pay back the settlement. However, it is important to note that the court is not going to take those actions for the complainant. Once the plaintiff wins a personal injury lawsuit, it is up to them to collect the money or file the necessary paperwork to go about garnishing wages. It is a long process, and it can be frustrating.

The big question of who is responsible for paying out the settlement in a personal injury lawsuit is a multi-faceted question. If there is an insurance company involved, then the plaintiff might be able to start collecting funds from the insurance company after there is a ruling. However, if the insurance coverage is not sufficient, then the plaintiff may only get part of their award.

If there is no insurance involved, then the chances of collecting money are bleak. Before filing a personal injury lawsuit against someone, it is prudent to find out if they have the resources to pay the settlement. If the resources are not there, then the lawsuit could wind up being a waste of time.

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