Understanding CTP Lump Sum Settlement Time Limits in NSW
There is no fixed deadline under NSW law for accepting a lump sum settlement offer in a Compulsory Third Party (CTP) motor accident claim. However, the process is governed by statutory timeframes that affect when offers must be made and when claimants may need to act to preserve their rights. The insurer must respond to a claim within 28 days of receiving it, as required by the Motor Accident Injuries Act 2017. Failure to respond within this period may allow the claimant to request a review, but it does not extend the time to accept a settlement offer.
Key Procedural Deadlines and Their Impact
The 28-day response period is a procedural deadline, not a time limit for accepting a lump sum offer. Once an offer is made, the claimant may accept it at any time, but delays may affect the availability of future benefits. If the claimant’s only injuries are threshold injuries, weekly payments and treatment and care benefits generally cease after 52 weeks from the date of the accident, as provided under sections 3.11 and 3.28 of the Motor Accident Injuries Act 2017. This means that a claimant who delays accepting an offer may lose access to ongoing financial support, particularly if the injury does not qualify for damages.
What Constitutes a Threshold Injury in NSW
A threshold injury under the Motor Accident Injuries Act 2017 includes soft tissue injuries, such as whiplash, that result in a permanent impairment of at least 10 per cent of the whole person. The term 'soft tissue' is part of the statutory definition under section 1.6. For a spinal nerve-root injury to qualify as a threshold injury, it must produce neurological signs other than radiculopathy, as defined in the Motor Accident Guidelines. If a claimant’s injury meets this threshold, they may be eligible for a lump sum settlement, but only if they have not already received benefits that have been paid for more than 52 weeks.
Practical Steps to Take When a Lump Sum Offer Is Made
When a lump sum offer is received, claimants should:
- Review the offer in relation to medical evidence, including reports that confirm the injury and its impact on daily life.
- Check whether the offer includes compensation for past and future losses, such as lost income, medical expenses, and pain and suffering.
- Preserve all documentation, including the insurer’s written offer, medical records, accident reports, and correspondence.
- Seek independent legal advice before accepting any offer, particularly if the injury is complex or the offer appears low relative to the injury’s severity.
What Happens If You Do Not Accept an Offer Within a Certain Time?
There is no legal time limit for accepting a lump sum offer, so a claimant may accept it at any time. However, if the claimant delays and the insurer has already ceased paying weekly benefits or treatment and care benefits after 52 weeks, the claim may no longer be able to access those payments. This is particularly relevant where the only injuries are threshold injuries. Accepting a lump sum offer after this point may result in a claimant receiving a single payment that covers all past and future losses, but they will not be able to claim ongoing benefits.
Example Scenario: A Claimant in Bankstown
A person in Bankstown was involved in a motor vehicle accident on 15 March 2025. They sustained a soft tissue injury to the neck and were assessed as having a 12 per cent whole person impairment. The insurer made a lump sum offer on 10 April 2025, but the claimant delayed accepting it until 10 October 2026. By that time, the 52-week period for weekly payments had expired, and the insurer had already stopped providing treatment and care benefits. The claimant accepted the offer, which included compensation for past and future losses, but they no longer had access to ongoing financial support.
When to Seek Legal Advice
If a claimant is uncertain whether an offer reflects the full value of their claim, or if they believe the insurer has not responded within 28 days, they should seek legal advice. A solicitor can help assess whether the offer is fair, whether a review is possible, and whether the claimant may still be entitled to benefits. Legal advice is especially important if the injury is complex or if the claimant has a history of prior claims.
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