Structured Settlements in Personal Injury Cases
Know what you’re agreeing to before you sign!
In the event of a serious injury due to someone else’s negligence, some insurance companies provide financial compensation to injury victims and their families in the form of a structured settlement. But what are structured settlements? How do they work? And are they the best option for someone who has suffered a severe or permanent injury?
The short answer is “it depends.” A structured settlement can be the right solution in certain situations. It can also be another tool in the insurance company’s arsenal as they work to pay victims as little as possible. If you are unsure about whether a structured settlement is right for you, continue reading.
What is a structured settlement?
The majority of personal injury claims are resolved by a single payment from an insurance company, usually in the form of a check made out to the injured party. Structured settlements are different because they provide multiple payments that are stretched out over a pre-determined length of time. Such payments typically begin with an initial check (for example, if the injured party is a minor, they might receive their first check on their 18th birthday) followed by additional payments made annually, quarterly or monthly.
What are the benefits of accepting a structured settlement?
Depending on your needs, a structured settlement can offer certain benefits over a traditional lump-sum payment, including:
- Payments are made regularly (annually, quarterly or monthly) and provide steady income over an extended period of time.
- Payments have a fixed rate of return and will always remain the same, regardless of changing market conditions.
- Structured settlements prevent individuals from spending their settlement proceeds too quickly. This can be especially helpful in cases that involve an injured child, who might be tempted to spend their entire settlement when they reach 18 (the age of majority in the State of Washington).
- Payments are often exempt from state and federal taxes.
- Structured settlements generally pay more over time than traditional lump-sum settlements.
What types of cases benefit from using a structured settlement?
Using a structured settlement does not make sense in every case. Due to brokerage fees and other considerations, structured settlements often involve cases with young individuals who have been seriously injured. Common examples include:
- Serious injuries that involve children under 18 years old.
- Personal injury claims where someone has suffered a permanent disability.
- Medical malpractice cases that result in a serious birth injury with a permanent disability or birth defect caused by a medical error.
- Workplace injuries that result in an employee not being able to perform the same job functions as before.
These are just a few examples of injury claims that can benefit from using a structured settlement. Every case is unique and requires careful consideration.
Should I accept a structured settlement offer from the insurance company?
It is a common mistake to accept a settlement offer too soon. In the context of structured settlements, this frequently occurs when a minor child has been injured. The insurance company may present the child’s parents with a structured settlement offer that sounds like a lot of money (six figures or more). But it would be unwise to accept such an offer without first consulting with an attorney.
For example, does your child require future medical care? Has their injury resulted in any amount of disability? As your child continues to grow and develop, will their needs change over time? Is it possible your child’s injuries will continue to affect them into adulthood in ways that are not currently understood? Is the insurance company’s settlement offer adequate to address your child’s needs? Are there any other insurance policies available that can provide additional compensation for your child?
These are all important questions that should be considered before you decide to accept a settlement offer of any kind.
How can a lawyer help?
Structured settlements are typically offered when someone, often a child, has suffered a serious injury with life-long consequences. That’s why it’s important to have legal guidance when making such an important decision. If you are trying to decide whether or not to accept a structured settlement offer from an insurance company, consulting with an experienced personal injury attorney can help in many ways.
An attorney can review the facts and use their knowledge and expertise to determine the total amount of financial compensation you are entitled to receive. If the settlement offer from the insurance company is inadequate, your attorney can take legal action and file a lawsuit on your behalf. In many cases, this is the only way to hold insurance companies accountable. Hiring a lawyer helps to level the playing field and maximize your compensation.
The stakes can be very high when it comes to injury claims due to negligence or a bad accident, especially when young children are involved. The financial impact of your injury – or an injury sustained by a loved one – can add up to hundreds of thousands or millions of dollars.
Personal injury lawyer Colin Scott understands the challenges injury victims and families face after a serious accident. To learn more about the legal options available to you and whether a structured settlement makes the most sense for your specific circumstances, contact our personal injury law firm in Vancouver, WA and schedule a free consultation today.