How to Settle a Claim When A Child is Injured

It is not uncommon for children to be injured in accidents, such as motor vehicle collisions, dog bites, falls from outdoor play equipment, etc. When a minor is injured in an accident, they have, and often bring through a parent or other representative, a claim against the person who is responsible for the injury.

The minor’s claim is considered an asset of that child, not their parents. It is important to also note that a settlement agreement for an injury claim is a contract. The injured party is contracting to give up their rights to additional compensation and/or the chance to have their claim heard by a jury in exchange for a set, agreed dollar amount.

Here in Indiana, as in most states, a contract entered into when one party is a minor can be voided when that child turns 18 years old. Because of that rule, which would make settling a minor’s claim difficult, the Indiana legislature has enacted laws which make settlements for claims of a minor final and binding, even after the child becomes an adult. Under these laws, parents and legal guardians of minors are permitted to negotiate and settle a legal claim on behalf of the child. Indiana Code § 29-3-9-7. However, before the settlement can be made final, the parents or legal guardian must file a petition with the court requesting approval for the settlement. This petition should be filed either in the county where the minor lives or in the county where a lawsuit regarding the incident has been filed.

If settlement for a minor’s injuries is for an amount more than $10,000, the State requires a Court to establish a guardianship over the child. Indiana Code § 29-3-3-1. This guardianship does not have an effect on the status of a parent or other legal guardian over the person of the child. It simply creates authority for the guardian to manage the minor’s financial affairs related to the settlement.

A petition to establish a guardianship is filed by the individual(s) requesting to be appointed guardians. The petition must explain the reason why a guardianship is being requested. Indiana Code § 29-3-5-1. When a guardianship is established for a settlement purpose, the petition to establish guardianship and the petition for the court to approve settlement should be filed at the same time. The court will hold a hearing on both requests. The parents or legal guardians will be asked to explain to the court the circumstances that led to the injury, the condition and treatment of the minor after the injury, and why the agreed settlement is in the best interest of the child.

After settlement has been approved by the court (and a guardianship established, if necessary), funds are released and provided to the parent or legal guardian. The full amount of the settlement money must be applied “to the support, use, and benefit of the minor.” If there are outstanding medical bills for the child’s treatment, the court can authorize disbursements from the settlement funds to the individual providers. The balance of the settlement money will then be disbursed to the child, through the guardian, who then must deposit the funds into a restricted account in the name of the minor. Any withdrawal of funds before the minor reaches 18 must have prior approval of the court. The court will require parents/guardians to provide documentation to prove that the settlement money was handled as required. When the minor reaches the age of 18, they are to be given access and control over all of the money in the account.

If your child was injured in an accident caused by someone else’s negligence, or if your or you company is the subject of a claim related to an injury to a minor, it is wise to seek out the advice of an attorney before signing any settlement agreements or releases. Having an attorney represent you during the settlement negotiations will ensure you are not waiving any claims or rights on behalf of your child.

For questions contact a member of Barrett McNagny's Litigation team. 

About the Author:

Casie J. Towsley focuses her practice in the area of litigation, including commercial litigation, insurance defense, premises liability and contract disputes. She can be reached at 260.423.8823 or at cjt@barrettlaw.com.