People get offered lump-sum settlement amounts for a broad range of reasons. Perhaps they were in a car accident, and the insurance company wants to pay out a single check for the entire cost of the crash. Maybe they have a large workers’ compensation claim related to a job injury that amputated a limb or an acquired illness related to their work.
Regardless of why you find yourself dealing with a lump-sum settlement offer, it’s important that you reflect on the offer before you take any kind of action. The reason why is simple. What may seem like an extraordinary amount of money at first may not come anywhere close to covering the actual financial consequences of your illness or injury.
Once you accept that lump-sum settlement, you likely won’t have any legal recourse to seek additional compensation if you find that the settlement wasn’t enough later on. In other words, before you sign anything about a settlement or cash that check, you need to be confident that it is an appropriate amount.
Know the limits for the compensation you can receive
In some cases, what seems like an unfairly low settlement amount may be the maximum permissible benefit in your situation. For example, the New Jersey workers’ compensation system has maximum benefits for specific kinds of injuries and illnesses.
If you make a claim related to another driver’s motor vehicle insurance policy, the settlement will likely never exceed the total amount of coverage that driver carried on the policy unless you have uninsured or underinsured driver coverage.
However, excluding those specific limitations, it’s important to know that there is usually some wiggle room in any settlement offer. Choosing to negotiate and ask for a better settlement offer can help protect you and your financial stability in the future.
Do the math to make sure the outcome is fair
The only real way to determine if a settlement offer is reasonable based on the circumstances of your injury or illness is to calculate how much your condition has already cost you and what it will likely continue to cost for the future.
You need to look at everything from lost wages and decreased future earning potential to medical expenses and the cost of repairing or replacing your personal property damaged as a result of the incident. Beyond that, there may be other expenses that you can seek compensation for, such as the cost for household work or self-care that you can no longer perform without assistance.
Getting a fair settlement isn’t being greedy. Instead, it is protecting yourself and your family over the interests of an insurance company that would like to limit how much they have to pay you.