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The pros and cons of structured settlements in car crash claims

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After a car crash and the subsequent legal affairs that follow, many people will choose to accept their settlement in a lump sum payment rather than receiving payments over time. 

However, there are some benefits to receiving car crash settlements over time. One of these benefits is that you are given more time to spend the money, which can be helpful if you need to pay for medical expenses or remain unsure as to what you want to do with your allotted settlement. 

But much like automotive-related crashes themselves, legal settlements can get a bit messy. That is why it is important to weigh both the pros and cons of a predetermined car crash legal settlement, because there is also a fair deal of risk involved with each option.  

Are structured car crash settlements right for you?

Structured settlement payments are typically made in installments over a measured span of time, which often translates to multiple payments over numerous years. This methodology comes with its own tax breaks and can be used to pay for a myriad of expenses, such as medical bills, tuition and housing. A structured settlement can also provide stability and security for the injured party. 

Personal injury lawyers are vital as they help ensure that you get the best possible deal when signing an agreement for a structured settlement. Dealing with insurance companies can be difficult, and an experienced attorney can help make sure that you are getting the settlement that you deserve. 

If necessary, hire an experienced attorney to represent your case in court, for this will make the process easier and provide you with peace of mind throughout the duration of the process.

car crash settlements

Structured settlements offer a variety of benefits for personal injury victims who have been involved in a car cash. When provided with tax-free income, you are able to protect your future health care needs and are supplied with additional (and often immediate) access to cash. 

However, there are some inherent drawbacks to structured settlements to go along with all of its perks. The following considerations should all be weighed prior to deciding if this particular form of court settlement is right for you and your case. 

Pros of a structured settlement

Structured car crash settlements offer a clear financial path during what is often a long and complex litigation process. Although they may appear more expensive initially, this approach is often worth the investment. Some of the benefits of a structured settlement include: 

Predictability: Payments are made on a fixed schedule, which can help with budgeting and planning for the future. A particularly useful perk when a car crash involves personal injury. 

Tax advantages: Structured settlement payments are generally tax-free, which can add up to significant savings over time. 

Protection from creditors: Since these payments are typically made through an annuity, they are not available to creditors in the event of bankruptcy. 

Estate planning benefits: Since the payments are not considered income, they can be passed on to heirs without incurring estate taxes. 

Cons of a structured court settlement 

Loss of flexibility: When you receive a structured settlement, you agree to a fixed schedule of payments that will be paid out over a predetermined period. This can be great for those who need the stability of knowing exactly how much money they will obtain each month. The only major downside here is that it can also mean less flexibility if your life circumstances change. For example, if you lose your job or have to go back to school, you may not be able to get the money you need to cover your expenses. Additionally, if you decide that you would like to use some of the money from your settlement for something other than what it was originally intended for, you may not be able to access these funds 

Limited investment opportunities: One of the biggest cons of a structured settlement is the limited investment opportunities available to recipients. Without additional investment income, recipients may find it difficult to keep up with rising living costs. Additionally, if the recipient needs to access the full settlement amount at once, they may have to pay significant taxes and surrender a portion of their monthly payments. 

The potential for mismanagement: Structured settlements offer tax breaks and predictability, but they also can be easily mismanaged. When an individual receives a structured settlement, they sign over the payments to a third party in exchange for a lump sum. This third party, often an insurance company or investment firm, manages the payments on the party’s behalf. If the firm fails to handle these affairs properly, the client may suffer financial loss. For example, if the investments made with the settlement money lose value, the individual may not receive all of their payments. Additionally, if the third party goes bankrupt or becomes embroiled in legal trouble, the individual may not receive any payments.


Although a structured settlement may not be ideal for every car crash court claim, there are enough pros to this option to warrant its consideration. 

As the victim, having the flexibility of receiving payments from the court-determined proceeds over an allotted amount of time is one of the more obvious benefits. These timeframes can even span the length of a lifetime depending upon the severity of the auto accident.

As for the predetermined amount of payment to be made, the frequency with which they are made, the length of the settlement process and various other agreement terms, negotiations tend to be based upon the victim’s needs.  

If you are ever in a car crash involving another party, a structured settlement could be the right settlement option. Just be sure to consult your personal injury lawyer beforehand for a consultation. An injury lawyer specializing in car crash claims not only serves as your personal guide throughout the duration of the court process but can be the deciding factor in precisely how much money is allotted to you. 


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