Structured and Lump-Sum Settlements in Car Crash Claims

If you suffer a car crash in Atlanta, GA, an Atlanta car accident lawyer can help you recover compensatory damages. These damages are typically recovered through a car crash claim. But failing that, you can launch a lawsuit to hold the responsible party accountable.

Once you win the lawsuit, it is time for you to receive the settlement amount. At this point, you must make a decision – whether to go with a lump-sum settlement or a structured settlement. Here is a look at both types of settlements, and their pros and cons.

What is A Structured Settlement?

In a structured settlement, you receive the total settlement amount in installments over an agreed-upon period. You can negotiate the size and frequency of the installments to suit your long-term needs. This means that you can determine whether you want monthly, bi-annual, or annual installments. It is also possible to negotiate unequal installments so that you receive larger initial installments and smaller subsequent installments. 

To cite an example, suppose you are awarded $100,000 in damages for your car crash losses. You can have an insurance company pay you this amount in monthly installments of $5,000 or $10,000, or any other agreed-upon amount. Alternatively, you can get an annual payment of $20,000 for five years. The terms of a structured settlement can be very flexible.

Pros and Cons of Structured Settlements

A structured settlement offers many advantages but also comes with its downsides. Here is a look at both aspects.


  • You have a lot of freedom to negotiate structured payment terms that suit your needs.
  • You can recover a larger first installment to meet your urgent bills and then recover the rest as smaller installments.
  • You are able to avoid any major taxes as the payments are small enough.
  • You don’t spend the money too fast, which is always a risk in lump-sum payments.
  • You are assured of a long-term financial support thanks to the installments.


  • You are legally obliged to follow the terms of settlement once they have been finalized.
  • Once you agree upon a structured payment plan, the agreed-upon portion of the settlement is paid to a life insurance company. This company then pays you the installments over the designated period. There is always the risk that this company may go bankrupt. If it does, you will lose the amount that you are still owed.
  • A structured settlement typically results in smaller payments. This means you can’t buy a house, get a new car, or make any other major investment.
  • You can’t invest the amount as the installments are not large enough.

What is A Lump-Sum Settlement?

A lump-sum settlement involves receiving the full amount of settlement money in a single go. For instance, if a judge or jury awards you $200,000 in damages for car crash losses, you get the full $200,000 as a single payment.

A lump-sum settlement may sound more appealing but like a structured settlement, it comes with its pros and cons. Here is a look at these.

Pros and Cons of Lump-Sum Settlements

There are both pros and cons to lum-sum settlements.


  • You receive a large amount of money immediately. This allows you to cover any large outstanding medical bills caused by a car crash injury.
  • You are able to make major financial decisions such as purchasing a house or making an investment.
  • Your settlement amount is transferred to you in full, so there is no risk of losing the amount due to the insurer’s bankruptcy.


  • You run the risk of spending the money too quickly and recklessly. This is often the case where a plaintiff receives a large amount in a single lump-sum payment.
  • You may be unable to manage the sizable amount which can complicate your financial matters.
  • The money you receive as a part of the car crash settlement is non-taxed. However, if you invest this money and then receive a profit or dividend, these will be taxed.

Choosing Between Structured and Lump-Sum Settlements

In nearly all car crash settlements, you can choose between a structured settlement and a lump-sum settlement. The right choice ultimately depends on your short-term and long-term needs.

If you need to make major short-term payments, such as paying steep medical bills or paying for a new car to replace a totaled vehicle, you may go for a lump-sum payment. Similarly, if you need a major financial investment in the short term, a lump-sum settlement is a better option.

On the other hand, if you need the settlement amount to support you over the long term, a structured settlement is a better choice. This is particularly preferable if a car crash injury forces you to take time away from work. The smaller installments will ensure that you stay financially secure as you recover and seek new opportunities.

However, it is best to consult a qualified lawyer when making a choice between these two types of settlements.

Hiring a Reliable Car Accident Lawyer in Atlanta, GA

If you have suffered a car crash with losses, it is important to get the legal help of a qualified lawyer. A good lawyer will help you file the lawsuit and win it, while also helping you choose the right type of settlement. Here at the Greene Legal Group, we help you make decisions that maximize your payout and secure your rights. Call us today for a free session with our lawyers.

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