You may have heard of structured settlements, but you wouldn’t be alone if you didn’t fully grasp what they entail. Words like annuities, plaintiff, and defendant could leave you a bit puzzled at times. So, let’s turn to a few hypothetical stories that illustrate the concept of structured settlements more vividly than the typical legalese parlance.
Let’s consider an older woman who suffers devastating injuries in a car crash. She’s returning from her daughter’s house at dusk when a negligent driver in an SUV slams into her car. As a result, she experiences substantial pain, life-threatening injuries, and significant blood loss. Doctors conclude that her severe hip injuries will confine her mobility. Consequently, the court grants her a structured settlement that includes a monthly payout of $3,800 for 15 years, starting the following month. Her car insurance company is also ordered to pay her a lump sum of $500,000 when she turns 70. This scenario reveals how structured settlements can ensure long-term care for victims.
Now envision a 10-year-old boy, Johny, attacked by a dog at the park. Johny sustains deep facial wounds and fractures from falling during the encounter. The court determines that the dog owner is responsible for compensation. Hence, the owner engages a structured settlement company, which buys an agreement from an insurance company to pay yearly annuities of $25,000 for five years starting when Johny turns 18. Also, the owner agrees to make four bi-yearly payments of $100,000 over two years. This instance demonstrates the flexibility of a structured settlement in deferring payments until the beneficiary is no longer a minor.
Finally, consider a 40-year-old factory worker, Mark, who loses his life in a factory accident. A fire bursts from a furnace near where he was working, and the adjacent fire extinguisher is out of order. The court finds the company liable and orders a structured settlement for his wife. The company must pay $40,000 per month for the following 30 years. She also has the discretion to request higher payments, six months ahead, once she turns 50, for her medical needs. But, amid the settlement period, the company goes bankrupt and must liquidate. Despite this, the state government ensures that all remaining payments are fulfilled through the liquidation proceedings. This case reveals the structured settlements’ potential as a long-term financial security net for victims’ families and their adaptability to unforeseen future needs.
These three hypotheticaling cases provide a more comprehensive understanding of situations where a court might award structured settlements. More often than not, the court leans towards mechanisms that guarantee prolonged support for the victims or those dependent on the victims. Moreover, these cases reveal the potential amounts and timeframes associated with structured settlements. Importantly, it also underscores the priority of fulfilling settlement obligations, even in the event of the issuing company’s bankruptcy.
