When most people hear the words personal injury settlement, they picture a million-dollar payout. They also picture dramatic scenes of victory and celebrations.

These mind pictures come from overly enthusiastic movies and TV shows. The biggest problem with the shows and movies is that they create unrealistic expectations. 

In reality, injury settlements are carefully calculated to compensate for specific damages. They are not designed to reward plaintiffs beyond what is necessary to recover from their losses.

Misconceptions about these settlements often lead to disappointment when the final amounts are revealed. This is why understanding how settlements work is crucial before filing a claim.

The reality is far removed from the big and small screen. In the majority of cases, a personal injury settlement does not mean a huge payout. 

Instead, settlements aim to cover the basics, such as medical bills, lost wages, and other quantifiable costs. While some cases may include compensation for pain and suffering, these amounts are typically modest and capped by law.

Plaintiffs who expect a significant financial windfall often misunderstand the purpose of a settlement. It’s about restoring balance, not creating wealth.

Most settlements are modest in real life because they are only meant to cover expenses. Personal injury settlements are not a windfall that allows plaintiffs to buy a house in Hollywood or a villa in Spain. 

Setting the Record Straight

Movies often depict plaintiffs as the underdog. They create an entire story about how a plaintiff suffers huge damages only to go up against the unbeatable legal team of a massive company. But, at the last minute, the plaintiff’s luck is on point as they win millions of dollars in punitive damages. 

Now, punitive damages are awarded in real life, but rarely. Punitive damages awards are only considered in gross negligence and intentional harm circumstances. Even then, it hardly ever runs into millions. 

The majority of personal injury cases are settled outside of court. This is because the people and companies being sued want to avoid the expense and unpredictability of a legal trial. These settlements are based on the damages suffered by the plaintiff and nothing more. 

What Influences the Value of a Personal Injury Settlement Amount?

A lot of factors come into play when determining a settlement amount. If you are thinking of filing a personal injury case, it is crucial to understand these factors. Knowing how settlement amounts are calculated will help you gain realistic expectations to prevent disappointment. 

Severity of the Injury

If you are injured in an accident, the severity of your injuries will determine the bulk of your settlement amount. If you sustained minor injuries, your payout will be modest at best. If you suffer paralysis or brain injuries, your settlement may be higher. 

Higher settlements cover long-term medical expenses and loss of earning capacity. They also compensate victims for the emotional toll their injuries take on them. 

Still, even with higher settlements, it is very unlikely that the final amount will reach a million. 

Medical Expenses

A settlement is supposed to cover medical costs. This includes hospital stays, surgery, physical therapy, and medication. Yet, this does not mean your settlement will be in the millions. 

More often than not, medical expenses can be negotiated. This will be noted before you are offered a settlement. The other party may also dispute whether certain treatments are necessary. When this happens, the settlement may be further reduced. 

Lost Income

It will factor into your settlement if you cannot work because of your injuries. However, this does not mean you will get an excessively high payout. 

Most insurance companies will do their best to contest lost wages claims, especially if they include future lost earnings potential. In some cases, they succeed, which will diminish the final payout. 

Non-Economic Damages

You may experience pain and suffering or anxiety as a direct result of the accident that caused your injuries. Emotional distress is categorized as non-economic damages, which is part of personal injury settlements. 

Remember that while non-economic damages can increase a settlement, they are subjective. They are also often capped by state laws. This means you will not get as much as you might think. 

Insurance Policy Limits

When you file a personal injury case, you file it against the at-fault party’s insurer. The at-fault party’s policy limits will play a major role in determining your payout. For instance, if you demand $200,000 in compensation, you may only receive $50,000 if that is the limit of the defendant’s coverage.

It is possible to collect more by suing the person. However, this would entail going after their assets, which is often impractical. 

Net Settlement

Most people also do not realize that, in most cases, a plaintiff does not walk away with the full amount they are awarded. For instance, a plaintiff may be awarded $100,000, but their lawyer has not been paid yet, and there may be medical liens to come. 

Most personal injury lawyers work on a contingency fee basis. When they win your case, they take a percentage of the settlement. This can be as much as 40%, which means if you get $100,000, you will only have $60,000 left. 

You may also have a lien placed on your settlement by healthcare providers and insurers who want to recover the cost of your treatment. 

Moreover, you will also have to foot the bill for court filing fees, expert witness fees, and investigation costs. As such, the net settlement is often far less than you may have expected. 

Why Do Unrealistic Expectations Happen?

It is not only entertainment media that skews the perception of personal injury settlements. The process is often misunderstood as well. 

For example, many people do not understand why the plaintiff in the famous McDonald’s hot coffee case was initially awarded $2.7 million in punitive damages. 

The jury presiding over the case found that McDonald’s was 80% to blame for the incident in which a 79-year-old woman spilled her McDonald’s coffee on her lap in 1992 and suffered third-degree burns. She had to undergo skin grafting and two years of medical treatment. 

The plaintiff initially sought $20,000 from McDonald’s to cover her medical expenses. When the company refused, the plaintiff’s lawyer filed a case of gross negligence. 

Eventually, the punitive damages were reduced to $640,000, and both parties agreed to a confidential amount later. 

It Is Important to Stay Realistic About a Personal Injury Settlement

It is so tempting to dream of a life-changing personal injury payout, but it is always better to stay realistic. If you are injured in an accident and file a personal injury case, your eventual payout will only cover your expenses and losses. 

You can achieve a fair resolution by understanding the above factors and working with an experienced lawyer. 

Winning a personal injury case will never be about hitting a jackpot. It is only about getting the compensation that will help you move forward.