People who have been injured through some else’s fault, and therefore have a personal injury claim, are often unprepared for what must be done when their claim settles. It is not complicated but does need some attention to follow a few basic steps to ensure that all is well and there are no subsequent issues afterwards.
It is often surprising that the injured person who is settling often are not aware that they must sign a full release of any and all claims against the person who caused their injuries and that person’s insurance company. In other words, the settlement absolutely ends any claim that the injured person may have against the at-fault party and the at-fault party’s insurance coverage; there will be no more money from that source.
Injured persons may not be aware that when the settlement is paid, insurance companies who are secondarily liable must be repaid. The insurance company that insures the person who caused the injuries is the primarily liable insurance company. Any other insurance carrier is secondarily liable. The secondarily liable carriers have to pay only until the primary coverage pays. In an auto accident situation, the injured person’s PIP coverage pays for the initial treatment expense and wage loss.
The primarily liable carrier will not pay until there is a full settlement of all claims. In the meantime, the secondarily liable carriers, such as PIP, health insurance and Medicare pay. So they are repaid out of the settlement proceeds. If the injured person is represented by an attorney on a contingent fee basis (percentage of settlement) for a Washington claim, the insurance carriers being repaid out of the settlement must contribute pro rata to injured person’s attorneys fees and litigation expenses if the injured person is otherwise made whole by the settlement.
The at-fault carrier will insist that all secondarily liable carriers and unpaid health care providers are paid out of the settlement because those carriers and providers often have a lien on the settlement. There is a possibility that if the settlement occurs and the unpaid providers or secondarily liable carriers are not paid, that their liens will be enforced against the at-fault carrier, who will then be stuck paying twice.
Therefore, it is common that the at-fault carrier will insist that the injured person sign a hold harmless and indemnity agreement protecting the at-fault carrier. What this agreement basically says is that the injured person will hold the at-fault carrier harmless and defend and indemnify the at-fault carrier against any lien or claim by an unpaid provider or a secondarily liable insurance carrier.
The justification for that is because usually only the injured person knows for sure who of that person’s insurers have paid for treatment or lost earnings, and which health care providers the injured person has seen for treatment. The at-fault carrier will usually not settle on any other basis.
Under an indemnity and hold harmless agreement, if the injured person or his attorney were to fail to pay a claim or lien out of the settlement, and suit were brought by the claimant or lien holder against the at-fault carrier, the injured person could end up having to bear the cost of any attorney to represent the at-fault carrier, and pay any judgment against the at-fault carrier. That is why these issues must be handled with care.
If the injured person is represented by an attorney, the payment of all these amounts is usually handled by the attorney from the settlement proceeds, which have been deposited in the attorneys trust account.
When settlement occurs, we furnish the injured person with an accounting of what is being paid out of the settlement proceeds, which we ask the injured person to approve before anything is paid. That eliminates or minimizes errors. That is why it is helpful if the settlement of the claim is handled through the representation of an experienced personal injury attorney.
Contact an experienced accident attorney today to evaluate your options
If you need an accident attorney in Washington or Oregon, you can hardly find anyone as experienced and knowledgeable as Mr. James Sellers. If you've been in a motor vehicle accident and you are uncertain what you next step should be to file a claim for damages, please fill out our free case consultation or call us to speak with Mr. Sellers for an informal discussion regarding your options.
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