What’s the difference between periodical and interim payments?
Date: June 12, 2019 by idu-net
If you’ve been involved in a legal claim for compensation following personal injury or medical negligence the settlement sum (whether agreed by negotiation of determined by a court) isn’t a windfall – it is to ensure that your needs are met now and in the future.
The aim of any compensation award is generally to put a person back in the position they would have been in were it not for their accident or injury – so far as money makes that possible. But with catastrophic injuries, such as spinal cord or brain injury, it is also important to make sure that sufficient funds remain available to meet that individual’s needs over the long term – potentially for the rest of their life.
The disadvantages of lump sum awards in serious injury cases
In the past, most successful compensation claims for serious traumas that have a direct, serious and long lasting impact on the health and life of a person were paid by way of a single lump sum. Indeed, in some claims that still remains the case. It may seem advantageous to have all the money up front, but lump sum settlements mean that the injured client and their family are then faced with the onerous task of managing and investing that fund so that it lasts and they don’t run out of money to pay for what is essential support.
Nowadays, in catastrophic personal injury claims, such as spinal cord or brain injury, the court may decide that a lump sum payment is not appropriate, especially in circumstances where there is uncertainty about life expectancy. The court may rule that all or part of the damages – usually the element of care and loss of earnings – is paid in the form of a continuing series of regular annual payments, known as periodical payments, to the injured person for the rest of their life.
Periodical payments should not be confused with interim payments. Under the Rehabilitation Code, for example, defendants (or more accurately their insurers) are encouraged to immediately pay for therapies, treatments and aids in order to speed the injured person’s recovery. During the course of a claim, an individual may also receive regular interim payments to cover lost earnings and other accident-related expenses. However, where an interim payment has been made, that amount will be deducted from any final award to pay money or damages.
The advantages of periodical payments
The biggest advantage of periodical payments is that they provide certainty for the future. In most cases the income received will not be taxed and will keep pace with inflation. If it is probable that a person’s condition may deteriorate in future, the payments can be ‘staged’ so that they will increase to cover the increasing costs of any additional or more intensive care that may be needed over time.
Anyone who might need more information about how a claim might be paid or has suffered a serious accident that wasn’t their fault should visit the IDU Legal website or call the FREE legal helpline on 0333 305 4357 to get a direct link to expert solicitors who can help.