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  • Writer's pictureKenneth Powell

How Is a Settlement Paid Out?

Updated: Feb 24, 2022

After possibly rejecting a few settlement offers and finally coming to a settlement agreement with an insurance company is not the end of a claim. The next step comes in the form of a settlement check and distributing it to pay off debts. Understanding how personal injury settlements are generally paid out can help a person know what to expect in the coming weeks.

How Long Does It Take to Get a Settlement Check?

How Long Does It Take to Get a Settlement Check?

Each case is different, so many factors come into play when waiting for a settlement check. However, insurance companies are also confined to time limits and deadlines imposed by the laws in each specific state.

In most states, the law gives insurance companies 15 days to investigate claims and announce rejection or acceptance. The insurance company may prolong this to 45 days with a valid explanation and on sufficient grounds. Acceptance of the claim means that the insurance company has five business days to send the settlement check.

It could take up to two weeks to receive the check once it has been sent out. If it has not been received in due course, the insurance company might be guilty of delaying the payout in an ill-manner.

Lump-Sum vs. Structured Settlement

How a settlement gets paid is up to the victim. They can choose a structured settlement or a lump sum. A structured settlement pays the victim multiple installments over an extended period, whereas a lump sum means they get the total compensation in a single payment.

By choosing a structured settlement, it can protect the individual from spending all the money at once. This cash can be used to pay bills and other costs in the future, so planning is essential for victims of crash car incidents.

Medical Bills and Liens

Once the settlement check has been received, some parties might be entitled to a portion of the award. Most hospitals pay for medical care upfront and may have a medical lien against the settlement.

In the case of a medical lien, the hospital automatically receives a part of the settlement to cover medical expenses. Employers' liens, health insurance liens, and mechanic liens may apply to the payment. The value of liens can often be negotiated with the help of car accident lawyers in St Louis.

Attorney and Legal Fees

When any liens against the settlement are paid, it's time to fulfill outstanding attorney fees and legal expenses. Most lawyers operate on a contingency fee basis, meaning if there is no financial reward, they don't get paid.

Once the individual has received the settlement, they need to pay the lawyer a total amount for their services. After all debts and liens are paid, the remaining compensation is for the victim to keep. This part of the settlement is typically used to cover the pain and suffering damages the person endured.

How Is a Settlement Taxed?

The last thing to tackle when dealing with a settlement is paying taxes. There might be taxes owed on a portion of the awarded settlement check. In most cases, the government does not tax injury settlements as income, but it does monitor this area.

If awards for punitive damages have been received, this part of the settlement may be subject to some form of taxation. There may also be taxes on payment of hospital bills if expenses were deducted in a previous tax year.

Can a Claim be Reopened Once Settled?

Typically, when a claim is settled and the settlement check has been received, the case is over. Legally, a person cannot reopen an issue or enter into further negotiations with the insurance company or plaintiff for a different amount.

That is why it is vital to ensure that the settlement amount adequately supports the victim’s losses and injuries before accepting. For example, if they have a neck and back injury. It is crucial to understand how a settlement claim works to be prepared for any incidents that might arise during or after court.


A personal injury case is never a fun experience. It can leave the victim with pain and suffering that could last a lifetime. The personal injury attorneys at Powell Law firm are experts in dealing with cases of this nature. They can help people get the most out of a personal injury claim while maintaining a solid client-attorney relationship with 100% confidentially.

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