What is a Qualified Assignment?
The defendant (or his/her liability insurance company) may transfer the cost of future damage payments to a third party by means of a “Qualified Assignment” to a financially secure and experienced institution. The assignment provides the claimant with strong financial security, and the defendant can close its books on the case. This assignment is referred to as “qualified” because, if done properly, it qualifies for favorable tax treatment. In return for an initial payment, the assignee then takes care of making the specified damage payments to the injured person over time. This process relieves the defendant of further responsibility for the payments and transfers the administration and record-keeping responsibilities. The assignment company specializes in these activities and may offer additional financial security to the claimant.