Advance Payment
Definition
An advance payment is money paid to a claimant before the final settlement of their insurance claim. Also called a partial payment or interim payment, it provides immediate financial relief while the full value of the claim is still being determined. Advance payments are typically credited against the final settlement amount, meaning they are not additional money but rather an early disbursement of funds you’re entitled to receive.
How It’s Used in Personal Injury Cases
Advance payments can help injury victims cover urgent expenses—like medical bills, rent, or car repairs—while their claim is being processed. Insurance companies sometimes offer advance payments as a gesture of good faith, particularly in clear liability cases where there’s no dispute about who caused the accident. However, accepting an advance payment may come with conditions, so it’s important to understand the terms before agreeing.
In some cases, attorneys can negotiate advance payments from the defendant’s insurer to prevent financial hardship during lengthy litigation.
Practical Example
You’re injured in a collision caused by a commercial truck driver. While your attorney is still investigating the full extent of your injuries—which may take months as you undergo treatment—the trucking company’s insurer offers a $15,000 advance payment to help with immediate medical bills and lost wages. Your attorney reviews the offer, confirms there are no strings attached that would harm your claim, and advises you to accept. When your case eventually settles for $250,000, the $15,000 advance is deducted, and you receive the remaining $235,000 (minus attorney fees and costs).
Why It Matters to Your Case
Advance payments can provide critical financial relief, but they must be approached carefully. Some insurers use advance payments strategically—offering small amounts quickly in hopes that financially desperate claimants will accept lowball final settlements later. Before accepting any advance payment, consult with an attorney to ensure it won’t compromise your ability to recover full compensation. A legitimate advance payment should be credited against your eventual settlement without any release of your claims.
Key Takeaway
An advance payment provides early financial relief before your claim is fully settled and is deducted from your final recovery. Always have an attorney review the terms before accepting to protect your rights.