In a workmans comp claim, the insurance company’s proposed settlement terms almost always strongly favor the insurance company.
As a workers compensation attorney, I have been representing clients for decades to help them obtain reasonable lump sum settlements for their injuries, where doing that is in their best interest. I always advise them about all future consequences of these workers compensation settlement agreements. In Arizona these are called “Compromise and Settlements.”
In some cases, an insurance company may offer to settle a workers’ compensation case involving a permanent injury for one lump sum payment. Usually, these cases involve injured workers who are trying to obtain, or have already obtained, monthly compensation for unscheduled permanent disability (commonly involving back, hip, shoulder, head or psychiatric injuries resulting in a loss of earning capacity).
The Arizona Industrial Commission cannot order an insurance company to agree to a compromise and settlement; the insurance company must voluntarily do so. For this reason, offers to settle on a compromise and settlement basis often are low. Also, proposed settlement terms almost always strongly favor the insurance company.
Here are the “pros” and “cons” of settling:
“Pros” of a Workman’s Comp Settlement
- After you agree to a compromise and settlement you will no longer deal with the insurance company. That could be a welcome relief.
- There is no cost of living increase for permanent workers’ compensation awards, so the value of monthly payments decreases over time as inflation increases.
- If you die, your estate retains the settlement proceeds. Monthly payments for permanent awards, however, end when you die.
- You may use the settlement proceeds to invest, start a small business, further your education or any other purpose.
Cons of a Workman’s Comp Settlement
- Because insurance companies are not required to enter into compromise and settlement agreements, when they do, the amount offered can be much less than would be paid in monthly payments throughout your lifetime.
- When insurance companies agree to a compromise and settlement, they almost always require that you give up the right to reopen your case in the future. This would prevent you from getting any more compensation if your medical condition worsens.
- Some clients prefer getting regular monthly payments in order to help them manage their finances and plan for the future.
Any proposal by an insurance company regarding a compromise and settlement must be carefully evaluated by an experienced workers compensation attorney. Please remember – NEVER tell the insurance company that you will ONLY be satisfied with a compromise and settlement. That ensures that any offer you receive will be too little.
For more information, contact us today.