How Is Injury Compensation Paid?

The goal of an injury claim or suit is to obtain compensation. Clients often wonder how the payment process will work if they prevail in their cases. The answer depends on several factors, including the following. 

Is an Insurance Company Involved?

As a general rule, insurers are trying to spread costs and risks out as much as possible, and that applies to how they distribute settlements. If the settlement is fairly small, the insurance company may elect to deliver a lump sum.

However, it's very common for insurers to purchase annuities to pay compensation. The insurance company will acquire an annuity (a financial vehicle that pays a percentage regularly) and then name the victim as the beneficiary. As the beneficiary, you would receive the percentage payment on, for example, an annual basis.

There are some circumstances where insurers make payments directly. However, these usually involve specific economic situations where the market for annuities isn't favorable.

What if There Isn't an Insurer?

In that scenario, a personal injury law firm probably had to bring the claim directly to the defendant. Presuming the defendant settles the case, they have the same options an insurer does. They can purchase an annuity, make payment arrangements, or pay a lump sum.

Individual defendants have the additional option of transferring assets to you. You and the personal injury lawyer who took your case would have to work out how they get their percentage of the case in that scenario.

Did You Have to Sue?

Generally, the payment process works the same after a successful lawsuit as it does with a settlement. The major difference is that you will have the power of the court behind you if a payment arrangement isn't reachable. A personal injury can petition the court to compel payment, and an arrangement can go through the legal system if necessary.

More powerfully, though, the court can also place a lien on the defendant's assets. This means a court-appointed officer will seize the defendant's assets and put them legally in your possession. Those assets will then be yours to use or sell, although the issue of paying the personal injury law firm comes up once again.

Money Owed to Others

Finally, it's worth noting that some other parties can place liens on your settlement or judgment. Usually, these liens come from the doctors and hospitals that were involved in your care, but lawyers can pursue them, too. When navigating these circumstances, consider reaching out to a personal injury law firm.