Car Accident Claims Advice, Claim Income from Car Accident, Compensation for Auto Accident Victims

As large awards become more frequent, insurance companies are seeking less costly car accident claim compensation alternatives. One of the cheaper alternatives is the structured settlement: A package of upfront cash and monthly income. It is offered to a car accident victim before the case goes to trial, if the insurer's lawyers believe it likely that the victim will win a large award.

Insurers save money: Structured car accident claim settlements generally cost casualty underwriters 20% to 60% less than lump-sum settlements.
The package: The up-front cash may be used for medical bills, legal fees, a reserve fund, lost income, and specific needs (such as a specially designed house for a paraplegic). The scheduled income may be for a specific period or for life. It may be designed to increase or decrease on given future dates or at the occurrence of certain events. All aspects are negotiable. See accident claim for more information.

Caution: This type of settlement can look attractive to the injured party (and advisers), but it may not be the wisest choice. Litigation can be protected, but if a plaintiff has a strong case the insurer strives to settle quickly. It is axiomatic that the longer the delay in such a case the larger the settlement. The structured settlement was designed as an expeditious, less costly pretrial settlement device. However, it would not be offered if the plaintiff had a weak case. In that instance, though the insurer would be likely to win in court, it might first offer a small settlement that would be less costly than litigation.

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Insurance companies sell the settlement by:
Guaranteeing income for life.
Protecting minors and incompetents from inadequate or unscrupulous advisers and dishonest outsiders.
Matching benefits to the individual's needs, reducing the risk of financial mismanagement.
Getting plaintiff's lawyer paid immediately, or in installments over years.

Arguments against the idea:
The guaranteed income is vulnerable to erosion by inflation. Contrast: A $ 1 million lump sum settlement is reduced by immediate expenses to $750,000. That sum could safely yield an annual income of $60,000 to $75,000, leaving the principal intact. Or: It could buy an annuity that provides a considerably greater lifetime income than the $25,000 settlement figure noted above.
The courts are empowered to protect minors and incompetents. With a large lump sum settlement, the court could direct the purchase of an annuity or the establishment of a trust, limiting it to specific types of investments and appointing a reputable counselor as trustee. Either way, the accident victim has greater assurance of continued financial security than under the restriction of a structured settlement.

Car accident victims who win lump-sum settlements have a better opportunity to set up an adequate estate program for their survivors.
Bottom line: If a structured settlement is accepted, it should be made inflation-proof by including an escalation clause, which could be tied to the cost of living index.

On a different matter, and another dilemma. You have a small claim, is it worth it to take it to court? A suit for a small amount may be more trouble than it's worth.
The negatives:
Lawyers' fees.
Time lost in court, including postponements, perhaps several.
Once the case is won, the debtor may not be found.
The debtor may not have any money.
If the debtor does have money, it may cost more than it's worth to enforce the judgment and collect it.
Seizing property, garnishing wages are expensive, too.
Most judgments are never recovered, especially in large metropolitan areas.
The positives:
You may get paid when the suit is filed.
Some people resist everything else, but the summons and the fear of the courtroom scares them into paying.
The debtor may not have money now, but he may come into money or property later, and the judgment can be collected, with interest.
The judgment can prove the debt uncollectible and thus tax deductible as a worthless bad debt. Related topics: car accident suit claim income from car accident, collision claim tips compensation for car accident victims, compensation rates for car accidents ,

Source: Consumer Information Center

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