Workers’ Comp Settlement: What Can You Expect? (2025)

What Is a Workers' Comp Settlement?

Every state has a workers’ compensation system. These systems serve several purposes. First, it’s only fair that your employer helps you after you suffer an injury while working for its benefit. This help comes in the form of workers’ comp payments, which cover medical care and part of your wages.

Second, your employer pays for the cost of a workers’ comp policy. In exchange, it becomes immune from personal injury lawsuits filed by employees for on-the-job accidents.

Finally, both you and your employer have an interest in getting you back to work after an injury or illness. Whether you were disabled by carpal tunnel syndrome or a concussion, everyone benefits when you get treatment and return to work.

But in some cases, employees cannot return to work or cannot return to the same level of performance. These situations can result in significant financial and legal obligations for a workers’ comp insurer. To resolve these liabilities, insurers will often offer a settlement.

Three situations permanently impair a worker’s abilities and can trigger a settlement offer.

Death

Fatal work injuries happen in certain industries more often than others. Loggers, construction workers and commercial fishermen have the highest fatality rates. Transportation and construction, as large and hazardous industries, have the highest overall number of fatalities.

After an employee’s death, workers’ compensation pays death benefits to the employee’s surviving family members, often in a settlement.

Permanent Total Disability

A worker is totally disabled when they cannot maintain any gainful employment due to a physical or cognitive impairment. The employee not only can’t return to their previous job but is unable to do any work for which they could receive payment.

For example, someone who suffered a broken neck that caused quadriplegia has a permanent total disability that may result in a neck injury settlement. In cases involving spinal fusion surgery, workers’ comp settlements can vary significantly depending on the severity of the injury and the long-term impact on the worker’s life. The average settlement for such cases often reflects the high costs of treatment and ongoing care

Permanent Partial Disability

A permanent partial disability happens when a worker suffers injuries that cannot heal but still leave them able to work. Most states require a doctor to determine that the worker’s injuries have reached maximum medical improvement, which means that they will not heal any further even with additional treatment or therapy.

For example, an employee who loses a hand has a permanent partial disability. A knee injury that permanently affects the worker’s ability to stand for long periods of time might also qualify as a partial disability. In these cases, the insurer might offer to settle the claim.

When Will Workers' Comp Offer a Settlement?

Insurers will offer settlements when they face large or ongoing payments for death or permanent disability benefits.

While state laws vary, insurers usually pay death benefits in settlements. These benefits may include:

• The employee’s average weekly wage for a certain amount of time
• Funeral expenses
• Burial costs

If the employee required medical treatment before eventually succumbing to their work-related injuries, the insurer will also pay those medical bills.

Benefits for permanent total disability also include the worker’s average weekly wage up to a maximum amount set by each state’s workers’ comp laws. This maximum might be a dollar amount, such as $300,000, or a time limit, such as 85 weeks.

Permanent partial disability benefits are based on the worker’s disability rating. This rating depends on which body part has suffered the permanent injury. An amputated leg would result in a higher rating than an amputated toe, for example.

Workers who suffer two permanent injuries receive a rating that takes both into account. However, the combined rating is not simply calculated by adding the two ratings together. Instead, the insurer relies on a whole-body rating system that uses a complicated equation to calculate the total disability rating for multiple partial disabilities.

Calculating Workers’ Comp Settlement Amounts

The workers’ comp settlement amount you receive will depend on the type of claim and the nature of the disability. Death settlements are usually larger than permanent disability settlements, and permanent total disability settlements are usually larger than permanent partial disability settlements.

Why does workers' comp want to settle? Wage replacement benefits are paid weekly. Many insurers prefer issuing a single workers' comp settlement check rather than continuing to pay the worker or their family every week.

Workers’ comp insurance companies are particularly motivated to settle workers’ comp claim payments in states without fixed end dates for benefits. An insurer might pay for decades if the state requires permanent disability payments to continue until the worker’s death.

Also, some insurers will suggest settling a workers' comp case to see if the worker will accept a lower lump sum instead of waiting for their weekly checks. Thus, an insurer might offer a $100,000 workers’ comp payout even though the worker might receive $150,000 in weekly payments over four years.

The worker benefits by having money to pay for home and vehicle modifications, caretakers and living expenses. The insurer benefits by paying less than the amount legally required and taking the case off its books.

Learn More About a Workers’ Compensation Injury Settlement From ConsumerShield

Workers’ comp insurers offer settlements to resolve cases. They do not necessarily do it to benefit injured workers. ConsumerShield can help you find the right lawyer, who will not encourage you to take the first offer and will recommend pushing back and negotiating for a more beneficial settlement. Contact us for a free case evaluation.