Superb examples to explain you the concept of structured settlements

The mention of structured settlement might not be an entirely new term for you, but you wouldn’t be the only one who doesn’t yet have a crystal clear idea about exactly what these settlements are. Structured settlements, annuities, plaintiff, and defendant – all these terms could sometimes flummox you. The best way to understand the concept of structured settlements is to do so through the understanding of examples that are closer to real life than the legal jargon with is generally used to explain the concept. In this article, we try to drive home the idea of structured settlements through some fictitious examples of events which you are more likely to easily understand and envisage.

An elderly lady being badly injured in a road accident                 

Take the case of an elderly lady, driving back from her daughter’s home in the evening. A reckless driver speeding an SUV from the wrong side rams his vehicle into the lady’s car. She ends up in severe pain, and a life threatening situation because of the injuries and blood loss. In the hospitals, the doctors declare that acute hip injuries would render the lady incapable of moving freely. The court awards her a structured settlement, under which she is entitled to get $3,800 per month, for a period of 15 years, beginning the next month. Also, the car insurance company is liable to pay her an amount of $500,000 in lump sum, when she turns 70.

This is a good example to make one understand how structured settlements can provide for a victim’s care for a long period of time. Also, the regular repeat payment amounts tend to be large when the time of the settlement scheme is not too long.

A 10 year old boy being badly injured in a dog attack

Johny, a bright young boy, was strolling around the park when his neighbor’s burly dog went mad and attacked him. In the attack, Johny had his face severely scarred, and also suffered fractures resulting from a fall during the struggle with the dog. The court decided that the dog owner was, without a doubt, liable to provide settlement amount to Johny and his family. The dog owner then sought the services of a structured settlement company, which further bought a structured settlement from an insurance company providing annual payments of $25,000 for a period of 5 years, beginning when Johny would turn 18. Also, the dog owner had to give an amount of $100,000 in 4 bi-yearly payments over the subsequent two years.

The above case shows how the structured settlement can commence from a later date in the case of the beneficiary being a minor.

A factory worker losing his life because of an accident in the factory

Mark, a 40 year old laborer, was working near the furnace when it suddenly started spitting flames. The fire extinguisher fastened to the adjoining wall was not working at all. An unfortunate Mark fell victim to the fiery flames. Thankfully, the fire was soon controlled without further damage. The court held the company in whose factory Mark was working responsible for the untimely death of the man, and awarded his wife a structured settlement under which the company was obliged to pay a sum of $40,000 per month for the subsequent 30 years. Also, his wife was given the flexibility to seek higher payments with 6 months prior notice to the settlement company, to provide for her medical care when she grew past 50. Now, after 15 years of the structured settlement period, the company issuing the payments goes bankrupt, and has to be liquidated. Mark’s wife is worried about whether she would continue to receive the settlement amounts.  Thankfully, the state government ensures that the company pays all outstanding payments to the intended beneficiaries from the receipts of liquidation.

This case exhibits how structured settlements can prove to be long term stability solutions for the families of victims of accidents. Also, these settlements are flexible enough to provide for contingencies.

The above mentioned three cases exhibit a lot about the circumstances under which a court can grant structured settlements to individuals. In such situations, the court generally tends to choose settlement mechanisms that provide for long term care of the victim, or the dependants of the victim of an accident whose responsibility can be attributed to an individual or a company. Moreover, these cases also amply exhibit the kind of amounts, and the time periods involved in structured settlements. Also, the fact that even if a structured settlement company goes bankrupt and has to be liquidated, the obligations towards structured settlement beneficiaries have to met first, is explained succinctly.