You might have heard about structured settlements but might not be clear on exactly what they are. Words like annuities, plaintiff, and defendant can sometimes be confusing. So, let’s use some example stories to make the concept of structured settlements easier to understand.
First, imagine an older woman who gets badly injured in a car accident. She’s driving home from her daughter’s house at dusk when another driver in an SUV carelessly crashes into her car. She ends up with severe injuries and a lot of pain. Doctors say her hip injuries are so bad that she’ll have trouble moving around for the rest of her life. The court then decides to give her a structured settlement, which means she’ll get $3,800 every month for the next 15 years. Additionally, her car insurance company is ordered to give her a lump sum of $500,000 when she turns 70. This example shows how structured settlements can offer long-term financial support for someone who needs ongoing care.
Next, think about a 10-year-old boy named Johny who is attacked by a dog at the park. He gets deep cuts on his face and breaks some bones from falling during the attack. The court rules that the dog’s owner has to compensate Johny, so the owner sets up a structured settlement. They arrange for an insurance company to provide annual payments of $25,000 for five years, starting when Johny turns 18. The owner also agrees to pay him $100,000 twice a year over the span of two years. This case highlights how structured settlements can delay payments until a minor grows up.
Lastly, consider Mark, a 40-year-old factory worker who dies in a workplace accident. A fire breaks out near him, but the fire extinguisher close by isn’t working. The court holds the factory responsible and orders them to set up a structured settlement for Mark’s wife, which pays her $40,000 every month for the next 30 years. She also has the option to ask for higher payments six months in advance when she reaches 50, especially if she has medical needs. But then, the company goes bankrupt and has to liquidate. Despite this, the state government steps in to ensure all remaining payments are made through the company’s liquidation. This story illustrates how structured settlements can provide lasting financial security for a victim’s family and adjust to future needs, even if the issuing company goes bankrupt.
These examples help clarify why courts might award structured settlements. Often, courts prefer options that ensure victims or their dependents receive long-term support. They also show the kinds of amounts and timeframes involved in structured settlements, and stress the importance of honoring these payments even if the issuing company faces financial difficulties.