Written by Illinois law requires defendants who lose personal injury cases to pay prejudgment interest on the judgment amount. The Illinois prejudgment interest statute for personal injury cases, 735 ILCS 5/2-1303(c), went into effect in 2021 and changed the economics of delay in injury litigation. Understanding how the rule works helps plaintiffs and defendants alike make informed decisions about settlement and litigation strategy.
This article provides general legal information; consult a licensed Illinois attorney for advice specific to your situation.
What the Statute Says: 735 ILCS 5/2-1303(c)
Under 735 ILCS 5/2-1303(c), prejudgment interest accrues at six percent per year in personal injury and wrongful death cases on all damages except punitive damages, sanctions, statutory attorney’s fees, and statutory costs. The clock starts on the date the complaint is filed — not the date of the accident. (For injuries that predate the statute, it starts no earlier than the law’s July 1, 2021 effective date.) Interest continues to accrue until the judgment is entered by the court. One notable carve-out: governmental entities are not liable for prejudgment interest at all.
The statute includes a five-year cap on the accrual period. Even if a case drags on for eight years, interest is calculated on no more than five years of accrual. That cap prevents interest from becoming an open-ended financial exposure for defendants in complex, long-running litigation.
The Settlement-Offer Offset Mechanic
The statute contains a significant exception that changes how defendants should approach settlement offers. It turns on the highest written settlement offer the defendant makes within 12 months after the case is filed (or after July 1, 2021, whichever is later) that the plaintiff rejects or fails to accept within 90 days. If the eventual judgment is equal to or less than that offer, no prejudgment interest is added at all. If the judgment is higher, interest is calculated only on the difference between the judgment and the offer — not on the full award.
This mechanic creates a concrete incentive for defendants to make a serious offer within the first year of litigation. A defendant whose early offer lands at or above the eventual verdict owes no prejudgment interest whatsoever. Plaintiffs who reject a strong early offer and recover the same or less at trial give up the interest component entirely.
The offer must be in writing and must be made in the manner prescribed by the statute. Informal discussions or general settlement positions do not trigger the offset. Precise compliance with the procedural requirements matters.
Constitutionality: Cotton v. Coccaro
Defendants challenged the prejudgment interest statute on constitutional grounds shortly after it took effect. In Cotton v. Coccaro, 2023 IL App (1st) 220788, the Illinois Appellate Court for the First District upheld the constitutionality of 735 ILCS 5/2-1303(c). The court rejected challenges based on the right to a jury trial, due process, and special legislation, finding that the legislature had legitimate goals in compensating plaintiffs for the time-value of money and incentivizing earlier settlement.
Cotton v. Coccaro is the leading appellate authority on the statute as of mid-2026, but case law continues to develop. Questions about how the settlement-offer offset applies in specific circumstances, how interest interacts with structured settlements, and whether particular types of defendants are covered have not all been definitively resolved. Practitioners should monitor ongoing appellate decisions.
Practical Impact on Case Value
The six-percent annual rate is not trivial. On a one-million-dollar judgment in a case that took four years from complaint to verdict (with no qualifying settlement offer), prejudgment interest adds approximately $240,000 to the total recovery. That figure is factored into settlement negotiations from the start. Defendants who delay trial risk a substantially larger exposure than the underlying damages alone would suggest.
For plaintiffs, this means that filing the complaint promptly after an injury starts the interest clock immediately. Delay in filing — waiting months after an injury to retain counsel and initiate the lawsuit — forfeits interest that would otherwise have been accruing.
How Prejudgment Interest Fits Into Illinois Injury Law
Prejudgment interest is one of several procedural and substantive rules that shape personal injury cases in Illinois. For a broader overview of deadlines, damage rules, and procedural requirements, see our guide to Illinois personal injury laws, which covers topics from the two-year statute of limitations to comparative fault principles.
Illinois also allows post-judgment interest at nine percent under 735 ILCS 5/2-1303(a), which continues to run after judgment until the defendant pays. The two-rate system — six percent pre-judgment, nine percent post-judgment — creates escalating financial pressure to resolve the case at each stage.
What This Means for Your Case
Whether you are a plaintiff evaluating a settlement offer or a defendant assessing litigation risk, prejudgment interest under 735 ILCS 5/2-1303(c) is a material factor that affects the numbers on both sides of the table. The settlement-offer offset mechanic rewards defendants who make good-faith timely offers; the five-year cap limits — but does not eliminate — long-tail exposure.
Every personal injury case filed in Illinois after 2021 carries this interest component. It should be part of the analysis from the day the complaint is filed.
Talk to a Chicago Attorney — Free Consultation
Phillips Law Offices handles personal injury and wrongful death cases throughout the Chicago area. If you have questions about how prejudgment interest applies to your case or want to understand how settlement timing affects your recovery, call us at (312) 346-4262 or use our contact page to request a free consultation. Attorney review is required before any legal action is taken.
