By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.
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Why $25,000 is close to the other driver’s limit
A settlement this size is often set by the at-fault driver’s insurance, not by the injury. In Washington, $25,000 is the full minimum liability limit for one injured person. In California and Texas the minimum is $30,000, so a driver with a basic policy may have only a little more than this.
| State | Minimum per injured person | Minimum per accident | Law |
|---|---|---|---|
| California (policies issued or renewed on or after Jan. 1, 2025) | $30,000 | $60,000 | Veh. Code 16056, Ins. Code 11580.1(b)(1) |
| Texas | $30,000 | $60,000 | Transp. Code 601.072 |
| Washington | $25,000 | $50,000 | RCW 46.29.090 |
The per-accident figure matters when several people are hurt in one crash, because they all draw from it. The California Department of Insurance notes that the higher limits applied as policies renewed during 2025, so a crash early that year may involve the older $15,000 per-person limit in Vehicle Code 16056(a)(1).
Your own policy can add to the $25,000
Underinsured motorist (UIM) coverage on your own policy may pay more, and each state sets the trigger differently.
- California: UIM applies only when the at-fault vehicle’s liability limit is lower than your UIM limit, and only after that liability coverage has been paid out. Your insurer then subtracts what the at-fault side paid (Ins. Code 11580.2(p)(2)-(4)). With a $100,000 UIM limit and a $30,000 payment from the other driver, the most UIM could add is $70,000, and only if your damages support it.
- Texas: insurers must include UM/UIM coverage unless the named insured rejects it in writing. UIM pays what you are legally entitled to recover, up to your limit, reduced by what is recovered or recoverable from the other driver’s insurer (Ins. Code 1952.101 and 1952.106).
- Washington: a vehicle counts as underinsured when its liability limits are less than the damages you are legally entitled to recover, and a rejection of UIM must be in writing (RCW 48.22.030).
No-fault medical coverage also takes pressure off a small settlement. Texas PIP must be included unless rejected in writing, starts at $2,500 per person, and pays without regard to fault (Ins. Code 1952.152, 1952.153, 1952.155). Washington insurers must offer PIP with $10,000 in medical and hospital benefits (RCW 48.22.095). In California, look at your MedPay coverage. For more on the UIM claim itself, see our underinsured driver page.
Hospital and provider liens on a $25,000 recovery
At this size, the lien caps often decide how much is left. Each state sets them in its own way.
| State | Who can hold the lien | Limit on what the lien takes |
|---|---|---|
| California | Hospitals | Paid from no more than 50% of what is owed to you, after prior liens (Civ. Code 3045.1, 3045.4) |
| Texas | Hospitals, if you were admitted within 72 hours of the accident; also EMS providers in counties of 800,000 people or fewer | The lesser of the charges for the first 100 days, 50% of all amounts you recover, or a jury’s award for hospital charges minus a pro rata share of fees and expenses; EMS liens up to $1,000 (Prop. Code 55.002, 55.004) |
| Washington | Ambulance services, hospitals, nurses, physicians and surgeons | All of these liens together for one person and one accident may not exceed 25% of the settlement; the provider must file a notice with the county auditor (RCW 60.44.010, 60.44.020) |
On $25,000, half is $12,500 and a quarter is $6,250. Those are ceilings on the lien, and a provider may still accept less. Ask your lawyer in writing whether any balance above a cap will still be billed to you. Our page on medical liens covers how lien agreements work.
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Medicare can be settled up front at $25,000 or less
Medicare does not pay first when liability insurance is expected to pay, and its conditional payments must be repaid from the settlement (42 U.S.C. 1395y(b)(2)). For small cases, CMS offers a self-calculated conditional payment option. The total settlement cannot exceed $25,000, the injury must come from physical trauma, and treatment must have ended at least 90 days before you submit. The incident must also be at least six months old, and you give up the right to appeal the amount. It lets you learn Medicare’s figure before you agree to a number.
Example only: a $25,000 settlement
These are round, made-up numbers. The fee here is taken from the gross amount, and the medical figure is assumed after reductions.
| Example only | One-third fee | 40 percent fee |
|---|---|---|
| Gross settlement | $25,000 | $25,000 |
| Attorney fee | $8,333 | $10,000 |
| Case costs | $750 | $750 |
| Medical liens and payback, after reductions | $6,000 | $6,000 |
| Paid to you | $9,917 | $8,250 |
The real numbers come from your written fee agreement and your actual bills. California requires the contingency agreement to be in writing, state the fee rate and explain how costs affect the fee and your recovery (Bus. & Prof. Code 6147). Texas requires a contingent fee contract in writing, signed by the attorney and client (Gov’t Code 82.065). Washington requires a writing signed by the client that says whether expenses come out before or after the fee, plus a written statement at the end showing what you received (RPC 1.5(c)). Our $20,000 settlement page lists what a breakdown should show.
What this means for your case
Get the at-fault driver’s limits in writing and find your own declarations page before you discuss numbers. If you went to a hospital or rode in an ambulance, ask each one whether it filed a lien and for how much. If you have Medicare, raise the self-calculated option early, since it has timing rules. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou.
Deadlines keep running while you weigh an offer. Injury suits generally must be filed within two years in California (CCP 335.1) and Texas (CPRC 16.003), and within three years in Washington (RCW 4.16.080).
Common questions
Is $25,000 the most I can get if that is the other driver's limit?
Not always. Your own UIM coverage may add money under the rules above, and the driver can be personally responsible for more, although collecting from an individual is often hard.
Do I pay taxes on a $25,000 injury settlement?
Damages for personal physical injuries are generally excluded from income (26 U.S.C. 104(a)(2)). IRS Publication 4345 adds that the part covering medical expenses you deducted in earlier years is income to the extent the deduction gave you a tax benefit.
Can my health insurance take part of a $25,000 settlement?
It may, depending on the plan type and the state. Our $50,000 settlement page explains health plan, Medi-Cal and Medicaid payback rules.
Does it matter whether costs come out before the fee?
Yes. In the example, a one-third fee on $25,000 is $8,333. Taken after the $750 in costs, it would be $8,083. Your agreement says which method applies. Beverly Law offers a free case review in English or Spanish at (310) 552-6959. You owe no fees or costs unless we win. You can find more answers in our injury law FAQs.
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Related pages
Sources
- California Department of Insurance, New Year Means New Changes for Insurance (2025) (insurance.ca.gov)
- Cal. Vehicle Code 16056 (leginfo.legislature.ca.gov)
- Cal. Insurance Code 11580.1 (leginfo.legislature.ca.gov)
- Cal. Insurance Code 11580.2 (leginfo.legislature.ca.gov)
- Tex. Transportation Code 601.072 (statutes.capitol.texas.gov)
- Tex. Insurance Code ch. 1952 (1952.101, 1952.106, 1952.152, 1952.153, 1952.155) (statutes.capitol.texas.gov)
- RCW 46.29.090 (app.leg.wa.gov)
- RCW 48.22.030 (app.leg.wa.gov)
- RCW 48.22.095 (app.leg.wa.gov)
- Cal. Civil Code 3045.1 and 3045.4 (leginfo.legislature.ca.gov)
- Tex. Property Code ch. 55 (55.002, 55.004) (statutes.capitol.texas.gov)
- RCW chapter 60.44 (60.44.010, 60.44.020) (app.leg.wa.gov)
- 42 U.S.C. 1395y(b)(2) (law.cornell.edu)
- CMS, Demand Calculation Options (cms.gov)
- Cal. Business and Professions Code 6147 (leginfo.legislature.ca.gov)
- Tex. Government Code 82.065 (statutes.capitol.texas.gov)
- Washington RPC 1.5 (courts.wa.gov)
- IRS Publication 4345 (irs.gov)
- 26 U.S.C. 104 (law.cornell.edu)
- Cal. Code of Civil Procedure 335.1 (leginfo.legislature.ca.gov)
- Tex. Civ. Prac. & Rem. Code 16.003 (statutes.capitol.texas.gov)
- RCW 4.16.080 (app.leg.wa.gov)
Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.