When you’re pursuing financial compensation after an injury, don’t get complacent too soon. Whether you’re filing a lawsuit or dealing with an insurance adjuster on your own, it’s not a simple process.

In either case, the insurance company will offer you as little as possible in order to preserve its profits. They’re not on your side, and you’re unlikely to get a fair offer without involving an attorney to negotiate on your behalf.

Since there’s a lot at stake in a personal injury claim, here’s what you need to know before you accept an offer – no matter how good it might look on paper.

1. Understand what you’re agreeing to

Before you sign on the dotted line, you need to know exactly what you’re agreeing to. A settlement is more than just money. It’s usually an agreement that requires you to release all future claims, accept limitations, and drop the whole thing once you get paid. This applies regardless of how you’re settling.

Signing a settlement usually requires you to waive your right to sue for the same injury or incident. That means if your pain worsens or you need more medical treatment, you won’t be able to recover more money. 

The idea of receiving one lump sum is attractive, but there’s no guarantee it will be enough. You need to consider your potential future costs to know if you’re being offered a fair amount. That’s exactly why you need to hire an attorney – they’ll know immediately if your offer is too low, and they’ll fight to get you better compensation.

Most personal injury lawsuits settle out of court, so you’ll probably end up signing some type of agreement. However, only a lawyer can ensure it’s actually fair.

2. Evaluate the offer against your total damages

A settlement offer should reflect everything you’ve lost and what you might lose in the future. To calculate all known current financial losses, document all of your treatments, including hospital stays, surgeries, therapy, medications, and specialist appointments. Again, this is where you’ll want an attorney to make sure you get a fair offer.

If your injury has kept you away from work or will limit your future earnings, your settlement amount should take that into account. You also might be eligible for non-economic damages like pain and suffering. These awards can significantly increase your final settlement amount. 

For example, car accident settlements can range between $24,000 and $100,000 or even $1,000,000, depending on individual factors, including the severity of your injuries.

3. Read the fine print

Settlement documents often include clauses and terms that you need to know about before you sign. Some terms can significantly impact your rights and taxes. For example, the document might include a release claim that applies to future claims connected to, but not directly caused by, the original incident. Another common term that gets missed is that some settlements are structured, which means they’re paid over time rather than all at once. This will impact your cash flow and taxes.

Concerning tax liability, the physical injury portion of a settlement isn’t usually taxed, but lost wages and punitive damages often are. In addition to taxes, you’ll need to pay your attorney a percentage of your settlement if they work on contingency, which is typically around 33% to 45%. Usually, once a settlement is won, the check is mailed to the attorney, and they take their fees off the top and then pass the remainder of the check to their client. So get clear with your attorney regarding how much they’ll take out in fees so you’re not shocked at the last minute.

4. Always negotiate

Many people mistakenly take the first offer because it’s easier. But you can negotiate your settlement, and it can make a difference by thousands of dollars. The more evidence you have, the easier it will be to work out a fair offer. However, keep in mind that having an attorney negotiate on your behalf is exponentially smarter, since they’ll know exactly what your case is worth and how to get the insurance company to play fair. Insurance companies will continue to take advantage of your ignorance if you are not represented by legal counsel.

Secure your settlement and future

Accepting a personal injury settlement is a pivotal moment in your healing journey, and it’s important to know what you’re acquiring and giving up. By understanding the damages you’re entitled to, negotiating until you get a fair offer, and securing strong legal counsel, you’ll protect your finances and your peace of mind.