Simply stated, a commutation is the legal term for a petitioner asking the court to accelerate the payment of an award to answer some pressing need of the claimant.
Commutation reduces exposure in two ways:
Any commuted payment made is discounted 5%. Therefore, payments of compensation which are made under Order For Commutation save the insured money. (So, a commutation reduces the amount the respondent has to pay).
The payment of commutation is deemed to shorten the period of overall benefits. A claimant, under the New Jersey Workers’ Compensation Act, has two years to re-open a claim from the time the last payment was paid. By commuting payments, the period for re-opener is shortened.