What is a structured settlement and how does would it work in my car crash claim?

Most car accident victims settle their claims with the negligent driver’s insurance company through the payment of a lump sum settlement. This means A Calendar With Highlighted Datesthat they receive their compensation in one large payment. However, in certain situations, an accident victim may decide to accept their payments in a structured settlement. This is a settlement of a claim where the victim receives the amount of compensation in payments over years or his lifetime. Often, the first payment made is substantially larger than future ones. Here, we discuss how these settlements work so you can decide which one is right for you.

The Mechanics of a Structured Settlement

A structured settlement can be beneficial if you suffered a catastrophic injury or you feel receiving payments over time will help you use the money more wisely. Once you enter into a structured settlement, the insurance company will typically purchase an annuity insurance policy or another type of structured settlement life insurance policy that will pay you the agreed upon payments over time. You want to be certain that the insurance company used is highly rated so you are not risking it going out of business.

You can negotiate pretty much all the terms in a structured settlement. Important things to think about include:

  • Length of the settlement
  • How often you are paid
  • The amount of each payment
  • Whether you want any payment to be higher to meet an anticipated financial need, such as college or a medical treatment
  • Whether you want a larger lump sum payment at the end
  • Whether you want your payments to end when you die or continue on for your heirs

An experienced car accident attorney can discuss your circumstances with you and help you decide whether a structured settlement is in your best interests. Start an online chat today to schedule a free consultation to learn about your legal options.


David Hodges
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David Hodges is a founding partner of Kennedy Hodges. He focuses his practice on personal injury claims.