What Do You Say?
I’ve spent a lot of time telling folks who have Defense Base Act (DBA) claims that they should beware of the insurance adjuster. “The adjuster is just out to make the cheapest deal he can,” I have warned—or words to that effect. “Just you wait. He’ll try to save his company money at your expense.”
In all fairness, I have to report that sometimes that I’ve been wrong. My attitude has been too suspicious. Sometimes the insurance guy will see to it that you get a fair deal on the medical care and income support you need after you have been injured overseas. Maybe you’ll get the bills paid without even having to threaten a lawsuit!
So you might be surprised to hear from the adjuster six or eight or twelve months later. He’s got a deal to offer you. “Listen,” he might say, “We’re reaching a plateau in your care. You’re going to keep needing a few medications for the rest of your life, and you’re going to have some permanent level of disability. We can see that, but we also see that you’re not going to need any more major surgeries or special accommodations from here on out. So my people want to make a deal: we want to pay off your account. We’ll get together, figure out a fair value, and give you one big check, or maybe one smaller check each year for the next three years. Then we close the books on this thing. What do you say?”
What Is a Structured Settlement or Lump-Sum Payment?
Most claims under the Defense Base Act end in a settlement, rather than in a courtroom. The unusual feature in this case is that you’re receiving a settlement offer after there’s been an agreement on your benefit levels. The offer you have been tendered goes by many names: a buyout, a lump-sum settlement, or a structured settlement. A lump-sum settlement is usually handled by one big check; a structured settlement will give you regularly scheduled payments (typically once or twice a year) for a limited number of years.
If you accept a buyout, you will have to sign a document that ends the insurance company’s obligation to pay your medical bills and income replacement. That will be a permanent commitment on your part; you will not be entitled to change your mind afterwards and get weekly checks again. If a new medical complication suddenly arises from the injury that was covered under the DBA, that’s just too bad—the release you signed means the insurance company doesn’t have to pay for it.
There is one additional detail about structured settlements many people do not know about: they have a cash value. It is possible to find brokers who will purchase your annuity or rights to periodic compensation for a lump sum. Of course, you should expect that the broker will offer less than the total face value of the structured settlement; that’s how he makes a profit.
Why the Insurer May Prefer to Give You a Lump-Sum Settlement
The insurance adjuster doesn’t necessarily have sinister motives in offering you a lump-sum settlement or a structured settlement for your Defense Base Act. Insurers have some legitimate reasons to offer to replace weekly checks with a single large payment or a fixed number of payments:
A structured settlement closes the books on your claim.
Insurance companies hate uncertainty. Right now, your weekly DBA benefits are worth a specific dollar amount, but there’s no limit on how long you will collect that sum. A settlement puts a total value on your claim, which works out much better for the insurer’s balance sheet.
Getting a settlement agreement insulates the insurance company from increases in your claim.
As I mentioned earlier, once you sign off on the agreement, you waive future claims for your DBA injury. The insurance company is off the hook for covering those complications.
The insurance company won’t offer a structured settlement unless it thinks it’s a good deal. You have to ask: is it a good deal for YOU?
Why You May Prefer to Take a Structured Settlement Now
At the Turley & Mara Law Firm, APLC we’ve listened to our clients over the years. They have given us a number of reasons why they’ve found a structured settlement or lump-sum check advantageous:
Getting a larger check once a year allows flexibility to invest some of the money or spend part of it on larger-value items. A weekly check covers groceries, utilities, and rent—and then it’s gone.
Greater control of the budget.
The recipient gets total control over all the income when it comes in one larger check. Some of our clients say they don’t feel their DBA benefits really count as their money when it arrives as pocket change every week.
Ability to afford a major purchase.
One big check may allow you to meet a sudden need to help a child afford her wedding, get a college education, or pay off credit card debt.
Bottom Line: You Need a Realistic Assessment of Your Current and Future Needs
You still need to exercise caution when dealing with insurance company employees. I have heard stories about how some shady insurance adjusters try to manipulate the process to coax injured people to commit to a structured settlement that’s not in their best interest. For instance, they might point out that a large check would allow you to…
- Put a down payment on a new car.
- Refurbish your home.
- Buy a new entertainment center.
- Take the vacation of your dreams.
But, of course, the money from the buyout settlement is intended to cover your medical and living expenses for the rest of your life. If the amount of the settlement is fair, then squandering it on consumer goods means you will not have the money to cover vital payments later on.
It’s essential, then, that you get the advice from an experienced Defense Base Act attorney early on. He can help you accurately estimate your future needs, to make sure the settlement offer will be adequate. It’s also worth noting that the insurance adjuster’s offer need not be the final word; your lawyer can negotiate for a larger structured settlement amount—and he can justify that request with facts and figures.
Even if you decide to handle this yourself, you want to be as well prepared as possible. As a start, I suggest you read the opening chapters of my book, Win Your Defense Base Act Case: The Ultimate Straight Talk.
Disclaimer: Please understand these discussions and/or examples are not legal advice. All legal situations are different. This testimonial, endorsement and/or discussion does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, your particular case/ situation and/or this particular case/ situation.