In recent years, big accident claims are burgeoning. Insurance companies have to shell out large sums of money in such claims. Therefore, they are now trying to discover cheaper ways to settle these whopping claims.

Insurance companies have two main alternatives to settling big accident claims. One is through structured settlements where periodic installments are paid to the plaintiff and the other is through a lump sum cash payment. Structured settlements usually consist of cash upfront and the rest paid in installments spread over a number of years. Usually, this kind of agreement is offered to accident victims if the victim’s case is strong and the odds are in favor of the victim winning the lawsuit.

Claimants need to be sharp while handling these situations. If the settlement looks too good to be true, it probably is. More often than not settlements that seem appealing to the injured party are not all that favorable. Sometimes, the company may also attempt an out of court settlement if the defense attorney is of the opinion that the plaintiff’s case is strong.

Settling a case before a trial begins may sometimes be the best course to pursue. It is often advantageous to both: the defendant as well as the plaintiff. A structured settlement may benefit both parties at this point. On one hand, the defendant gets time on his side to pay the plaintiff in fixed periodical installments. On the other hand, the plaintiff gets the advantage of financial security over a period of time.

Once the case reaches a trial, the court also has a direct bearing on how a big accident claim is settled. A number of aspects are considered. The court may ask the defendant to create a trust for the victim. It may also instruct the defendant to purchase an annuity for the victim. In each case, the victim should be assured of receiving a stable periodic compensation.

But while agreeing to accept structured settlements, the claimants have to bear in mind that these settlements often do not take into account the time value of money. In short, this means that inflation will have no bearing on the settlement. So if you calculate the loss incurred over a number of years, the amount will be sizeable. Inflation is therefore an important factor to be given due weightage while deciding on structured settlements.

All said and done, the most prudent way to settle big accident claims should be worked out by the insurance company and should be feasible to both parties.

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