Definition of Commutation
A Commute, or Commutation, is an order that is made by a workers' compensation judge that you receive a lump sum payment for all or part of your permanent disability award. Instead of having your benefits paid on a weekly basis, you request that your employer's insurance company pay you a lump sum that is either part or all of your award. The commute/commutation order is made as a result of you accepting an offer by your employer's workers' compensation company to "buy outsome or all of your workers' compensation benefits in return for a lump sum payment.
This is usually done in such a way that the insurance company no longer has any obligation to you in the event of future medical problems that result from your injury. It is usually a full and final settlement. You are not allowed to reopen your workers' compensation claim. Because of this, great care should be taken in agreeing to a commute/commutation to ensure that the lump sum amount is adequate in the event of future medical problems. In some instances, a lump sum can be approved, but the insurance company is still responsible for medical expenses that may arise in the future, which are the result of your work-related injury.