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The decision to bring a car accident lawsuit to court is a serious one. It means you’ve been unable to reach a settlement with the other party. Before you proceed, you should consider whether the potential reward is worth the risk you’re taking. Even if you have a good chance of winning your case, it’s still possible that a judge or jury will rule in favor of the other side.  

Statute of Limitations 

The statute of limitations governs how long plaintiffs have to file a lawsuit after suffering a loss, such as being injured in a car accident. Individual states have their own laws regarding the statute of limitations on car accident lawsuits, so it’s important to check your state’s laws to see how much time you have to file. For example, in Kentucky, the statute of limitations is only 2 years, while in Maine, you have up to 6 years to bring a case. 

Does Waiting Hurt Your Case? 

Waiting for too long before pursuing a case can affect the outcome in various ways. In states with limited statutes of limitations, it reduces your lawyer's ability to build a credible case to bring to court. Lawyers must go through the process of discovery, where they compile evidence, take statements from witnesses and conduct depositions. If you wait too long, a lawyer may be unable to finish this process in time to bring your case to court. 

Another way waiting can hurt your case is that it makes it more difficult for witnesses to recollect the events that transpired the day of your accident. This can reduce your chances of success if your case hinges on these testimonies. It’s generally a good idea to begin speaking with an attorney shortly after you’ve been injured to ensure the best chances of success.  

What Happens When You Win a Car Accident Lawsuit?

If you win your case, the defendant is required to pay the damages the court decides to award. Your attorney is entitled to a portion of your compensation. The defendant may be required to pay your court costs, in addition to whatever damages you're owed. Most people who lose a car accident lawsuit have insurance that covers what the court orders them to pay, so they won't need to pay anything out of pocket beyond their deductible. It's also possible that you could settle your case without ever needing to go to court. Many lawsuits never make it before a jury.

What Happens After You Lose a Car Accident Lawsuit? 

There's always a risk that you could lose your lawsuit if you take your case to court. If your attorney feels you’re better off taking a settlement offer than trying to have your case heard by the court, it may be because you have a chance of losing. Should you lose your case as the plaintiff, the defendant isn’t required to compensate you for your injuries or property damages. You’re also not allowed to file another lawsuit against the defendant for the same incident.

In some states, plaintiffs who lose lawsuits are also required to pay the defendant’s attorney and court fees. You may not have to pay for your own attorney, however. Most personal injury lawyers have contingency agreements with their clients. This means they’re only compensated if they win your case. Attorneys who work under these types of agreements do their best to only take on cases they believe they can win.  

Are Car Accidents and Settlements Public Record? 

Whether your accident and court case are a matter of public record will depend on whether you settle. If you decide to take the claim to court, there will be a record of the trial. However, if you choose to settle out of court, this information won’t be a matter of public record. Some defendants choose to settle because they don’t want a record of the accident available to the public. 

Case Dismissal 

There are some instances where a case may be dismissed by the judge. Sometimes, the plaintiff voluntarily drops the case because a settlement was reached outside of court. In other instances, the judge may find that the facts alleged in the lawsuit aren’t sufficient to proceed to trial. If this happens, the judge may dismiss the case. A judge may also dismiss a case due to legal or procedural problems, like the case being filed in the wrong place. 

There are two types of dismissal when this happens. Dismissal with prejudice means the case is closed and can’t be filed again. A judge may throw the entire case out or choose to only dismiss a specific claim for damages while allowing the plaintiff to bring other claims to court. 

Dismissal without prejudice means that the plaintiff may try again, as long as they file within the state’s statute of limitations. This is a judge’s way of saying that the plaintiff’s attorney needs to build a better case or fix a procedural problem. If you’re able to do so, you can refile your case and return to court.

What Happens to Payments if the Case Is Dismissed? 

If the case is dismissed with prejudice, the defendant won’t be required to provide any compensation for claimed injuries and property damage. Since the lawsuit can’t be refiled, this is the final outcome. If you're the plaintiff and the dismissal is without prejudice, you can revise your legal strategy and try again. Whether the defendant has to pay anything will depend on the outcome of the case if it’s refiled. 

Plaintiffs can be ordered to pay attorney fees and other costs to the defendant if the case is dismissed. This can be especially likely if the court finds that the lawsuit was frivolous or if there was misconduct by the plaintiff or their lawyer. 

How Is a Dismissal Different From Losing Your Case? 

The primary difference is that the case isn’t allowed to proceed when a judge dismisses it. To lose your case, it must first be presented in front of a jury who deems that the defendant isn’t liable for your injuries. Judges usually only dismiss cases they don’t think have enough merit in an effort to discourage frivolous lawsuits and reduce court costs.  

What Kind of Records Remain After a Case Is Dismissed? 

Whenever you bring any matter to a court, it goes onto public record, unless you have the record sealed. The rules for sealing court records vary by state, but you must present a case for having the record sealed before a judge.Until this process is completed, there will be a record of a lawsuit available to the public.  


Both the plaintiff and defendant in a lawsuit have the right to appeal a ruling if they feel the evidence and facts conflict with the ruling. If a lawsuit has been thrown out with prejudice or the plaintiff has lost the case, this is the only way to continue seeking compensation.  

Can You Appeal the Result of a Car Accident Lawsuit? 

Whether you’re the plaintiff or defendant, you may appeal the result of a lawsuit if you’ve lost. Appeals can take years to be heard, and you could incur more court and attorney fees if you pursue an appeal, so keep this in mind when considering how you’d like to proceed.  

How Many Times Can You Appeal? 

You have the right to appeal a case to the court that presides above it, which means the number of appeals you can file depends on how many courts are above the one you filed your initial case through. Some states have four levels of courts through which you can appeal, while others only allow one before you’re unable to bring it to another court.  

Can You Use the Same Attorney for Your Appeal? 

You can use the same attorney for your appeal, but it’s a good idea to consult an attorney who specializes in appeals. Personal injury lawyers may not have the experience or expertise needed to win an appeal, and you should consider either having an appeals attorney handle your case or bringing one onto your legal team to work with your current lawyer.  

What happens once a settlement or judgment is awarded during a car accident lawsuit? It's important to know what your responsibilities are following the lawsuit, so you can make the right financial plans. This guide reviews how settlement amounts are determined and what happens next.  

Are Car Accident Settlements Taxable? 

If you're awarded a car accident settlement, it's a good idea to speak with an accountant before you do anything with the money. Some portions of your settlement are protected from taxes, while other parts aren't. For example, the money you're awarded as compensation for medical bills isn't taxable, but if you're awarded punitive damages or reimbursement for lost wages, it's a form of income in the eyes of the IRS. Some things you can't be taxed on include property damage, pain and suffering and the cost of medication.  

If You Pay a Settlement, Can You Report it as a Loss? 

Whether you can write your settlement off as a loss depends on whether you're required to pay. Most car accident settlements are covered by auto insurance, so the defendant doesn't typically need to pay out of pocket. However, if you have $100,000 in liability insurance and the settlement is for $125,000, you're required to find a way to pay the other $25,000 yourself.  

It's important to work with a tax accountant to determine what expenses are tax-deductible, so you're compliant with federal and state laws.  

What Kind of Income Is a Settlement? 

Any type of payment you receive is considered income by the IRS, according to Internal Revenue Code Section 61. IRC Section 104, however, allows you to claim an exemption on qualifying income from a lawsuit settlement. It also states that lawsuit settlements aren't a form of gross income to declare on your taxes. A settlement or judgment is treated as a tax-exempt distribution from the insurance company or defendant unless it includes non-tax-exempt compensation, such as reimbursement for lost wages.  

Does the Court Care How You Spend Your Settlement? 

The court won't tell you how to use your settlement, but it's not protected against liens and other court actions. For example, if someone owed child support and received an insurance settlement for a car accident, the court could order that a part of the settlement be used to pay what's owed. If you don't settle before going to court and you win the case, expect the defendant to appeal. If they do, this could delay when you receive your money.  

When you're rewarded additional compensation in the form of pain and suffering or punitive damages, it's important to have a plan for what to do with the money. Speak with a financial advisor and determine what your financial priorities are. If you have debt, for example, it might be a good idea to pay it off with your excess from the settlement. You can also invest the money and let it grow rather than spending it right away.  

What Factors Into a Settlement Amount?

Insurance companies will try to settle a lawsuit whenever possible to avoid the possibility that a jury awards the maximum compensation allowed by law. The amount of a settlement depends on the type of claim and the extent of the plaintiff's injuries. Here are some of the factors that affect the value of your settlement.  


Some injuries have a much greater impact on the settlement amount due to their long-term effects and how they impact the plaintiff's quality of life. For example, you can recover from a broken bone with proper medical care and physical therapy before returning to work. If you suffer from a traumatic brain injury, you may never have the same quality of life you enjoyed before the accident. 

Property Damage 

A settlement is for the purpose of making the plaintiff "whole" again. This includes compensation for the value of their vehicle and any other property that was lost in the accident. Insurance companies often try to reduce their liability by offering an amount that represents the current value of the vehicle, rather than the cost of purchasing a brand new one.  

Distribution of Fault 

Some states allow for shared fault claims, which means the value of a case can be influenced by whether both parties shared some of the blame for the accident. If it's clear that the defendant was at fault for the accident, the plaintiff has a much stronger case, and the insurance company will try to settle. If it's determined that the plaintiff shares some responsibility, the settlement offer will be reduced. 

Pain and Suffering 

It's difficult to quantify the value of a person's pain and suffering, so a jury would evaluate the severity of the case before determining how much to award. Insurance companies are aware of this and will use the same logic to decide what to offer for pain and suffering. The figure is usually a multiple of the sum of the plaintiff's financial damages. The multiple is higher for more serious claims.  

Medical Costs 

Medical costs include everything someone has already paid for care following an accident and an estimate of what they must pay in the future. For example, if someone needs ongoing treatment for a spinal injury, the cost of physical therapy, medication, surgery and other expenses in the future are also calculated.  

Lost Wages 

When someone is unable to return to work during their recovery, they're entitled to claim lost wages or income. This includes when an accident makes it impossible for the person to obtain employment in the future due to a resulting disability. Keep in mind that lost wages' reimbursement is taxable, and you should make plans to pay taxes on it.  

Who Pays: When and How 

The majority of car accident settlements and judgments are handled through insurance companies, but there are cases where the defendant must also pay money out of pocket. Here is how payment works: 


The plaintiff must wait for the settlement or judgment to be approved. If the settlement is greater than the defendant's insurance policy limits, it's possible to file a claim with their own insurance under the personal injury protection and underinsured motorist protection benefits in their policy. For example, if you're awarded $60,000, and the defendant's insurance only covers $50,000, then you could receive payment from your insurance company to cover the difference. 

In some cases, you can also seek damages out of the defendant's personal assets, but this isn't always possible because you can't collect compensation from someone who lacks the assets to pay. Any settlement or judgment is collected by the plaintiff's attorney, who deducts attorney and legal fees and then sends the final amount to the plaintiff.  


The defendant allows their insurance company to pay the settlement. There's no deductible for liability coverage, but the defendant still needs to pay a collision damage deductible to repair their own vehicle. If the defendant doesn't have enough coverage to pay for the plaintiff's injuries, they may be required to sell assets or have their wages garnished by the court. Cases that go this far aren't very common.  

The defendant has the right to appeal if they lose their case in court. They may also file a lawsuit against their own insurance company if the insurer doesn't act in good faith, such as by refusing to offer a reasonable settlement to avoid going to court.  

How Lawyers Get Paid 

Most personal injury lawyers work on a contingency basis, which means they only accept payment if they're able to win or settle your case. When you're awarded compensation, the attorney deducts the negotiated percentage of your settlement or judgment from the total and gives you the rest. If an attorney works on an hourly basis, they calculate the total amount of time they spent on your case and then deduct their fee from your settlement.  

How Long It Takes to Get Paid 

The plaintiff receives their money within a week or two once the lawyer gets the settlement. The length of time it takes for the lawyer to receive the money varies, depending on how long it takes to have the court approve it. The total time it takes to litigate a lawsuit also differs, depending on how willing insurance companies are to settle and whether an appeal is filed. In the worst-case scenario, it could take up to 2 years from the time the lawsuit is filed for the plaintiff to receive their money, but some cases can be settled in less than a month.  

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