Earlier this week we discussed the NTSB investigation into the causes of last year's tragic National Championship Air Race crash. This week also saw the creation of a $77 million fund to compensate the wrongful death and catastrophic injury victims of that crash.
The Reno National Championship Air Races organizers devoted $77 million to a compensation fund modeled on the program used after the September 11, 2001 terror attacks. The fund bases compensation according to injury categories. Payments apparently begin at around $15,000 for victims who suffered minor harms and range up to $75,000 for serious injuries. The fund has not disclosed how much compensation it will offer the families of deceased victims.
A central goal of this fund is to speed up the compensation process for victims. But while the organizers have not admitted any liability for the accident, any victim who chooses to participate in the fund must agree to surrender all rights to sue the racing association later.
This novel settlement model has appeared with increasing frequency in recent years. High profile arrangements include the September 11 fund and the massive $6 billion program to compensate various stakeholders after the BP Deepwater Horizon blowout in 2010. The race organizers tapped into the experience of both programs by hiring the same administrator to run this fund.
Although these funds can reduce delays for victims, participants may run the risk of receiving a smaller amount of compensation than they might otherwise deserve. A compensation fund, while convenient, might not be in every victim's best interests.
Source: Insurance Journal, "$77 Million Fund Created for Nev. Air Race Victims," Aug. 27, 2012