How Much of a $25,000 Settlement Will I Get? What Comes Out First in Denver

This page provides general information only and does not constitute legal advice. Reading this page does not create an attorney-client relationship. Laws vary by jurisdiction and change frequently. Always consult a licensed attorney for advice specific to your situation.

Why $25,000 Comes Up in Colorado Car Accident Claims

Colorado sets a floor for auto liability insurance. A Colorado auto liability policy has to carry at least the amounts below (C.R.S. 10-4-620), and the Colorado Division of Insurance lists the same figures for drivers.

Coverage	Minimum required in Colorado
Bodily injury, one person	$25,000
Bodily injury: everyone hurt in one accident.	$50,000
Property damage	$15,000

A driver who bought only the minimum has $25,000 in coverage for your injuries, no matter how serious those injuries are. So when an insurance company offers exactly $25,000, ask whether that number is the policy limit.

A policy limit is the most that one policy pays. It isn’t a measure of what your injuries cost you.

Limits differ from policy to policy, because they depend on what was bought. As one illustration, our published Colorado case results list a $1,540,000 car crash policy-limit settlement in Summit County. That entry shows only that a policy limit isn’t one fixed number.

Past results do not guarantee a similar outcome. Every case turns on its facts, injuries, and available insurance coverage.

What Comes Out of a $25,000 Settlement Before You’re Paid

Three kinds of deductions can come out of a settlement:

1. The attorney’s fee
2. The expenses of the case
3. Repayment claims and liens for your medical care

The attorney’s fee

If you hired a lawyer on a contingent fee, the fee is a share of what is recovered. Colorado’s rule defines a contingent fee as one that depends on the successful outcome of the matter, and it requires the terms in writing (Colo. RPC 1.5(c)).

The agreement has to state the percentage for a settlement, a trial, or an appeal. It also has to say whether the fee is figured before or after expenses come out (Colo. RPC 1.5(c)).

Colorado’s rule doesn’t set a percentage for injury cases. It requires that the fee be reasonable (Colo. RPC 1.5(a)) and that the number be written down.

That means the answer to “how much do lawyers take from a settlement” is in your signed agreement. We go through fee agreements line by line in our guide to what it costs to hire a Denver truck accident lawyer, and the same rule applies to car accident cases.

The expenses of the case

Expenses are separate from the fee. Colorado requires the fee agreement to give an estimate of expenses, to say whether the lawyer may advance them, and to state what you’d owe for expenses if there’s no recovery (Colo. RPC 1.5(c)).

“No fee unless we win” is a statement about the attorney’s fee. Expenses are a different line. Read the expenses clause in any agreement before you sign it, including ours.

Repayment claims and liens

If someone else paid for your medical care after the crash, they may ask to be paid back from your settlement. Each payer follows a different rule:

• Private health insurance or a benefit plan. Reimbursement under a policy or plan “is permitted only if the injured party has first been fully compensated for all damages arising out of the claim” (C.R.S. 10-1-135). The statute doesn’t say how it applies to plans governed by federal law, such as some employer plans, so ask which kind of plan paid your bills.
• Colorado Medicaid. The state has an automatic lien for the care it paid for when someone else is liable, and that lien has to be satisfied from the settlement (C.R.S. 25.5-4-301). The lien is limited to what federal law allows and can’t be more than Medicaid paid. The full-compensation rule above doesn’t apply to Medicaid (C.R.S. 10-1-135).
• Medicare. Federal law governs here. Medicare’s recovery center is responsible for recovering the conditional payments Medicare made when there’s a settlement.
• A hospital. A hospital can have a lien on the net amount payable to you, but it first has to bill your auto and health coverage the way it would for any other patient. A lien filed in violation of that rule lets you sue for two times the lien amount (C.R.S. 38-27-101).
• Your MedPay coverage. The insurer that paid medical payments benefits has no right to recover them from the at-fault driver, and the statute says it gives the insurer no claim against you for them except where they were paid because of fraud (C.R.S. 10-4-635).

The full-compensation rule matters when the settlement is a $25,000 policy limit. If your recovery equals all the liability and underinsured motorist coverage available, Colorado presumes you have been partially compensated. If it’s less than the coverage available, the presumption runs the other way (C.R.S. 10-1-135).

Either presumption can be rebutted, and a payer that disagrees can ask for arbitration.

When a payer is entitled to repayment, the amount can’t be more than it paid, and it’s reduced by the payer’s share of your attorney fees and expenses (C.R.S. 10-1-135). There’s a deadline attached to this process. If your recovery is less than your total damages and you plan to rely on the rule, you must notify the payer within sixty days of receiving each recovery (C.R.S. 10-1-135).

A Sample $25,000 Settlement Breakdown

The numbers below are a made-up example so you can see how they work. The 33% fee is an illustration only. It isn’t a quote from any firm, and Colorado doesn’t set one.

Line	Hypothetical amount
Settlement	$25,000
Attorney’s fee at 33%, figured before expenses	$8,250
Case expenses	$350
Repayment to a health plan	$3,000
Paid to you	$13,400

If the health plan in this example had no right to repayment because you weren’t fully compensated, the amount paid to you would be $16,400. If the agreement figured the fee after expenses, the fee would be a little lower.

Is $25,000 Really All There Is? Five Things to Check Before You Sign

A 25k settlement from a minimum policy can leave real losses uncovered. Before you accept one, check these:

1. Ask for the at-fault driver’s policy limit in writing. You want to know whether $25,000 is the limit or an opening number.
2. Read the declarations page of your policy for underinsured motorist coverage. This coverage is part of a Colorado auto policy unless the named insured rejected it in writing (C.R.S. 10-4-609).
3. Look for medical payments coverage. $5,000 of MedPay is included in a Colorado policy unless it was rejected (C.R.S. 10-4-635). Insurers have to disclose that it pays regardless of fault (C.R.S. 10-4-636), and it pays before your health insurance (the Division of Insurance’s auto insurance page).
4. Ask whether anyone else was involved in causing the crash. That could mean you need to look at other coverage options.
5. Hold off on signing a release until you have those answers. Ask what the release covers before you sign it.

How underinsured motorist coverage adds to a policy limits settlement

Underinsured motorist coverage can add to a policy limits settlement. Colorado law says it’s in addition to the other driver’s liability coverage and covers “the difference, if any, between the amount of the limits of any legal liability coverage and the amount of the damages sustained,” up to the limit you bought (C.R.S. 10-4-609).

It doesn’t cover punitive damages. Your insurer also can’t reduce it by a setoff for liability insurance, MedPay, or health insurance.

Here’s a hypothetical: your damages are $60,000, the other driver’s limit is $25,000, and you carry $50,000 of underinsured motorist coverage. The difference is $35,000, and that’s within your limit, so your policy is where you’d turn for it. Your policy may set conditions about settling with the other driver, so read it or have a lawyer read it before you sign a release.

We explain the uninsured side of this coverage in our post about being hit by an uninsured driver in Colorado.

A claim under your policy is a claim against your insurer, and Colorado gives you protection there. An insurer can’t unreasonably delay or deny a benefit owed to its policyholder (C.R.S. 10-3-1115). If it does, you can sue for two times the covered benefit plus reasonable attorney fees and court costs (C.R.S. 10-3-1116).

Our Denver bad faith insurance lawyers page explains how these claims work.

Will You Owe Taxes on a $25,000 Settlement?

For federal income tax, the IRS says a settlement for personal physical injuries or physical sickness is non-taxable in full if you didn’t take an itemized deduction for the related medical expenses in an earlier year (IRS Publication 4345). The same IRS publication treats interest, punitive damages, and medical expenses you deducted in an earlier year differently, so those parts can be taxable.

That publication covers federal tax only. A tax professional can tell you how it applies to your return.

How Long You Have to Act in Colorado

You generally have to start a lawsuit for bodily injury or property damage from a motor vehicle crash within three years after the claim accrues (C.R.S. 13-80-101). The statute lists exceptions, and other deadlines can apply, including for claims against a government body. If your crash was a while ago, check the dates before spending weeks going back and forth with an adjuster.

An offer that arrives before you’ve finished treatment asks you to put a price on care you haven’t had yet. Our post on when not to accept a settlement offer in Denver covers the signs that it’s too soon.

What Clients Most Often Get Wrong About a Settlement Check

These are the three things we hear most often from clients:

• Expecting the full amount. The settlement figure and the amount paid to you are two different lines on the disbursement statement.
• Forgetting that medical payers may be repaid. A health plan, Medicaid, Medicare, or a hospital may have a claim, and each follows a different rule.
• The insurer may treat $25,000 as the ceiling. It may be the ceiling of one policy. Underinsured motorist coverage, if your policy has it, is a separate source.

If any of these sounds familiar, you haven’t done anything wrong. To get a broader perspective on how claims are valued, refer to our explanation of the average car accident settlement in Colorado.

Questions to Ask Before You Accept $25,000

Bring these to the adjuster or to a lawyer:

• Is $25,000 the at-fault driver’s policy limit?
• Does my policy include underinsured motorist coverage, and if so, what is the limit?
• Do I have MedPay, and has it been used?
• Who paid my medical bills, and has any of them asked to be repaid?
• What does my fee agreement say about the percentage, and is it figured before or after expenses?
• What will the written disbursement statement show? Colorado requires your lawyer to provide you one at the end of a contingent fee case (Colo. RPC 1.5(c)).

Talk to a Denver Car Accident Lawyer About Your $25,000 Offer

You don’t have to work out the deductions alone. Bring the offer letter, your policy’s declarations page, and your medical bills, and we’ll go through what would come out and whether other coverage applies. Our car accident lawyers in Colorado handle these claims from our Denver office.

The consultation is free, and there’s no fee unless we win. Call (303) 209-9395 or reach us through our Denver contact page.

Frequently Asked Questions

Written by CGH Injury Lawyers.

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