Who Pays When a Personal Injury Lawsuit Is Won?

While many personal injury lawsuits may involve individual persons or companies as the parties, it can sometimes be difficult to deduce which party will pay for the lawsuit or settlement. The answer often depends on the circumstances and type of case in question, and if the defendant in the case has insurance coverage that applies to the scenario at hand. In many circumstances, like car accidents, the defendant is normally required to hold insurance in order to ensure that injured parties are able to collect on judgments. A judgment is the official ruling by the court that declares the defendant is legally obligated to pay some sum of money to the plaintiff. While obtaining a judgment in your favor may require hours of depositions, discovery, interviews, court hearings and negotiations, collecting the judgment from the defendant or other responsible party is another matter altogether.

There exists many kinds of liability insurance coverages to protect individuals and companies from having to cover the costs of a judgment if they happen to be at fault for an accident which harms another person or company. Liability insurance products exist to protect homeowners, vehicle owners, and businesses. These policies protect plaintiffs by helping to ensure they are made whole after an accident, and protect defendants by limiting the financial impact of an unfortunate accident or personal injury caused by the defendant. Despite having these policies, insurance companies are often hesitant to provide fair and complete payments to victims. Often, attorneys for the plaintiff attempt to negotiate with the insurance company to reach a fair settlement before filing a personal injury lawsuit. Hopefully, the insurance company offers a fair amount and a lawsuit is never filed. Unfortunately, it is common for there to be litigation if the insurance company disputes a claim or refuses to settle. If the plaintiff is successful in court, the insurance company usually is legally bound to pay out damages awarded by the court.

In some cases, insurance payouts may be limited by the level of coverage held by the defendant. For example, automobile insurance policies may have a limit on the amount of funds the insurance company will pay to injured parties. If the total damages awarded are less than this limit, the insurance company may simply pay the amount. It may be difficult to procure any funds owed by a defendant who lacks assets or sufficient funds to make the plaintiff whole. In some cases, it may take years for a defendant to finish paying for the injuries they caused, and in others, the amounts are never fully paid.

In some cases, when an employee of a company causes an injury to another party, the company itself may be required to pay for the damages instead of the employee. Under the theory of respondeat superior, a party is responsible for the acts of its agents, which commonly encompasses employer-employee relationships. As long as the employee was acting within the scope of employment during the accident, a court will typically find the company responsible for damages in addition to the employee. In many cases, the company may have deeper pockets or better insurance than the individual and may be a better entity from which the plaintiff can recover funds. Regardless of the circumstances, while winning a personal injury lawsuit or other legal action is worth celebrating, obtaining compensation for injuries sustained is the final goal, and there may be a few obstacles in the way of plaintiffs seeking to get paid once a personal injury lawsuit is concluded.