In this guide
The steps, from claim to check
- You file a claim with the at-fault driver’s insurer — and with your own insurer first in a no-fault state.
- The insurer investigates and decides whether its driver was at fault, and by how much.
- You finish treatment, or reach the point where future care can be estimated, so the claim’s full size is known.
- You send a demand with your bills and records — see what happens after the demand letter.
- Offers and counteroffers. A counteroffer ends the original offer — see rejecting a settlement offer.
- You sign a release giving up the claim in exchange for the payment, so every bill should be known first.
- The insurer pays, usually into your lawyer’s trust account; liens, the fee and costs are paid from it — see how long a lawyer can hold the check.
- You get the rest. The settlement timeline checker shows where a claim usually waits.
What a settlement is built from
- Medical bills — past and expected future treatment.
- Lost income — pay you missed, and lost earning ability if the injury is lasting.
- Property damage — repair or the car’s value, plus a rental or loss of use.
- Pain and suffering — no law sets a formula; it’s negotiated, and decided by a jury only if the case goes to trial.
What cuts it before it’s paid, state by state
| State | If you were partly at fault | Other driver’s minimum coverage | System |
|---|---|---|---|
| California | Pure comparative fault (Li v. Yellow Cab Co. (1975)) | $30,000 per person; $15,000 property | At-fault |
| Texas | Barred above 50% (Civ. Prac. & Rem. Code § 33.001) | $30,000 per person; $25,000 property | At-fault |
| Florida | Barred above 50% (Stat. § 768.81(2), (6)) | No bodily injury minimum; $10,000 property | No-fault |
| New York | Barred above 50% (CPLR 1411(a), (b)) | $25,000 per person; $10,000 property | No-fault |
| Pennsylvania | Barred above 50% (42 Pa.C.S. § 7102(a)) | $15,000 per person; $5,000 property | Choice no-fault |
| Illinois | Barred above 50% (735 ILCS 5/2-1116) | $25,000 per person; $20,000 property | At-fault |
| Ohio | Barred above 50% (R.C. 2315.33) | $25,000 per person; $25,000 property | At-fault |
| Georgia | Barred at 50% (O.C.G.A. § 51-12-33(a), (g)) | $25,000 per person; $25,000 property | At-fault |
| North Carolina | Contributory negligence (N.C. common law) | $50,000 per person; $50,000 property | At-fault |
| Michigan | Reduced; no pain-and-suffering damages above 50% (MCL 600.2959) | $250,000 per person; $3,000 for your car (mini-tort) | No-fault |
The minimum is only the floor — many drivers carry more, and their insurer can tell you the limit. But it matters: in the worksheet’s illustrative California example, $46,500 of losses meets the state minimums of $30,000 for injuries and $15,000 for property, and the most that policy pays is $37,500. Anything above the limit has to come from your own underinsured motorist coverage or the driver personally. In no-fault states your own coverage pays first; see car accident laws by state.
Example: $39,000 of injury losses, carried to the check
The same illustrative California crash, following only the injury claim. The car is often settled separately, and quicker. The other driver carries the state minimum, and the injured driver’s health plan paid the $18,000 of medical bills and wants it back:
| Medical bills, lost pay, pain and suffering | $39,000 |
| Above the other driver’s $30,000 per-person limit | −$9,000 |
| Lawyer’s fee (33⅓% of $30,000) | −$10,000 |
| Case costs | −$500 |
| Health plan lien, if claimed in full | −$18,000 |
| The check | $1,500 |
|---|
That gap is why three questions matter more than the size of the losses: how much insurance the other driver has, whether your own policy has underinsured motorist coverage to add on top, and whether the lien can be reduced. Liens are often negotiated, and Medicare must reduce its claim by its share of the legal costs — see medical liens. Run your own version in the take-home calculator.
Why an offer comes in lower than your losses
- The policy limit. The other insurer won’t pay past it; anything above comes from your underinsured motorist coverage or the driver.
- Your share of the fault. Every state above reduces the claim by it, and North Carolina bars it entirely if you were at fault at all.
- Treatment the insurer disputes. Gaps in care, or treatment it calls unrelated, get argued down; keep every record.
- An early offer. One made before treatment ends can’t account for what comes next — see rejecting a settlement offer.
From settlement to check
Lawyers must keep settlement money in a trust account and promptly deliver what a client is entitled to, with an accounting. Before that, three things come out:
- The fee. Florida’s rule shows the usual structure: up to 33⅓% of the first $1 million before the defendant answers a lawsuit, up to 40% after. See lawyer fees.
- Case costs — records, filing fees, experts.
- Medical liens — health plans, Medicare and Medicaid claim back what they paid. Medicare’s share is reduced by its part of the legal costs; see medical liens.
Damages for a physical injury are generally not taxable income under federal law — see are settlements taxable — and the take-home calculator does this last part in more detail.
Frequently asked questions
How are car accident settlements calculated?
They start from your losses — medical bills, lost income, damage to your car, and pain and suffering — then are reduced by your share of the fault under your state’s rule and capped by the at-fault driver’s policy limits. No law sets a formula for pain and suffering; it’s negotiated. The lawyer’s fee, case costs and medical liens come out before you’re paid.
Can you get more than the policy limits in a car accident settlement?
Not from the other driver’s insurer — its policy limit is the most it will pay. Above it, the money has to come from your own underinsured motorist coverage, if you have it, or from the driver personally.
Do you pay taxes on a car accident settlement?
Generally not on damages received for a physical injury, which federal tax law excludes from income. Interest and punitive damages are taxable, and parts of a settlement can be treated differently, so see our guide to whether settlements are taxable.
What happens after you accept a settlement offer?
You sign a release that ends the claim, and the insurer pays — usually into your lawyer’s trust account. Liens, the fee and case costs are paid from it, and you get the rest. Lawyers must promptly deliver funds a client is entitled to and account for them.
How long does a car accident settlement take?
It depends on how long treatment lasts, whether fault is disputed and whether a lawsuit is filed. The waits usually come from treatment that’s still going on, disputes over fault, and liens that have to be resolved before you’re paid.
Reviewed by
Morgan Hale, Editor. Writes about the financial side of injury claims — fees, liens, timelines and state rules — and checks every page against its sources before it’s published. Not a lawyer; “Morgan Hale” is a pen name. Editorial policy · How we calculate
Sources
- Background on: No-fault auto insurance (12 states and Puerto Rico; verbal thresholds; “choice” states) (Insurance Information Institute)
- California Vehicle Code § 16056 — Minimum liability: $30,000/$60,000/$15,000 for policies issued or renewed from 2025; higher from 2035 (FindLaw (California Vehicle Code))
- Texas Transportation Code § 601.072 — Minimum coverage: $30,000/$60,000/$25,000 (FindLaw (Texas Transportation Code))
- Florida Statutes § 627.736(1) (2025) — PIP: $10,000 limit, 80% of medical expenses; initial care within 14 days (The Florida Senate)
- Florida Statutes § 627.737(2) — When you can sue for pain and suffering (permanent injury threshold) (FindLaw (Florida Statutes))
- Florida Statutes § 627.733 — Required security (PIP) for every registered motor vehicle (FindLaw (Florida Statutes))
- Florida Statutes § 324.022 — Property damage liability: $10,000 (FindLaw (Florida Statutes))
- N.Y. Insurance Law § 5102(a), (d) — Basic economic loss up to $50,000; definition of serious injury (FindLaw (New York Insurance Law))
- N.Y. Insurance Law § 5104(a) — No recovery for non-economic loss except in the case of a serious injury (FindLaw (New York Insurance Law))
- N.Y. Vehicle and Traffic Law § 311(4)(a) — Minimum liability: $25,000/$50,000 ($50,000/$100,000 for death), $10,000 property (FindLaw (New York Vehicle and Traffic Law))
- 75 Pa.C.S. § 1705 — Limited tort and full tort options (FindLaw (Pennsylvania Consolidated Statutes))
- 75 Pa.C.S. § 1702 — Financial responsibility: $15,000/$30,000/$5,000 (FindLaw (Pennsylvania Consolidated Statutes))
- Auto Insurance Shopping Guide — Illinois minimums: $25,000/$50,000/$20,000; uninsured motorist $25,000/$50,000 (Illinois Department of Insurance)
- Ohio Revised Code § 4509.51 — Minimum liability: $25,000/$50,000/$25,000 (FindLaw (Ohio Revised Code))
- O.C.G.A. § 40-9-37 — Liability minimums set at the amounts in § 33-7-11(a)(1)(A) ($25,000/$50,000/$25,000) (FindLaw (Official Code of Georgia))
- O.C.G.A. § 33-7-11 — Uninsured motorist coverage (unknown driver: physical contact or an eyewitness) (FindLaw (Official Code of Georgia))
- N.C. Gen. Stat. § 20-279.1(11) — Proof of financial responsibility: $50,000/$100,000/$50,000 (FindLaw (North Carolina General Statutes))
- Michigan Compiled Laws § 500.3107c — PIP medical limit choices ($50,000 with Medicaid, $250,000, $500,000 or unlimited) (FindLaw (Michigan Insurance Code))
- Michigan Compiled Laws § 500.3135 — Tort liability limits under no-fault (noneconomic loss threshold; up to $3,000 vehicle damage) (FindLaw (Michigan Insurance Code))
- Michigan Compiled Laws § 500.3009 — Liability: $250,000/$500,000 unless you choose as low as $50,000/$100,000; $10,000 property (FindLaw (Michigan Insurance Code))
- Li v. Yellow Cab Co., 13 Cal.3d 804 (1975) — California adopts “pure” comparative negligence (FindLaw (Supreme Court of California))
- Texas Civil Practice and Remedies Code § 33.001 — No recovery if the claimant is more than 50 percent responsible (FindLaw (Texas Civil Practice and Remedies Code))
- Florida Statutes § 768.81 (2025) — Comparative fault; no recovery if more than 50 percent at fault (The Florida Senate)
- New York CPLR § 1411 — Damages diminished by culpable conduct; 2026 bar for motor vehicle cases under Insurance Law article 51 (New York State Senate)
- 42 Pa.C.S. § 7102 — Comparative negligence (no recovery if the plaintiff’s negligence is greater than the defendants’) (FindLaw (Pennsylvania Judicial Code))
- 735 ILCS 5/2-1116 — Plaintiff barred if more than 50% of the proximate cause (FindLaw (Illinois Code of Civil Procedure))
- Ohio Revised Code § 2315.33 — Contributory fault doesn’t bar recovery unless greater than the others’ combined fault (FindLaw (Ohio Revised Code))
- O.C.G.A. § 51-12-33 — Damages reduced by fault; no recovery at 50 percent or more (FindLaw (Official Code of Georgia))
- Fault Lines: Understanding Negligence Doctrines (North Carolina’s contributory negligence rule and its exceptions) (UNC School of Government, On the Civil Side blog)
- Michigan Compiled Laws § 600.2959 — Comparative fault; no noneconomic damages if more than 50% at fault (FindLaw (Michigan Revised Judicature Act))
- ABA Model Rule 1.15 — Safekeeping property (trust accounts, prompt delivery, accounting, disputes) (American Bar Association)
- Rules Regulating The Florida Bar, Rule 4-1.5(f)(4)(B) — contingent fee schedule (The Florida Bar)
- 42 CFR § 411.37 — Amount of Medicare recovery when a settlement is made (procurement costs) (eCFR)
- 26 U.S.C. § 104 — Compensation for injuries or sickness (Cornell Legal Information Institute)
- IRS Publication 4345, Settlements — Taxability (Internal Revenue Service)
Not legal or financial advice. InjuryMath is not a law firm and does not sell or broker funding. This page gives general information based on the sources listed; your contracts and your state’s law control. For advice about your situation, talk to a licensed attorney in your state.