Philip Dunford, 47, who with Angus Cleaver runs the Cleaford Christian Trust, which supplies aid to a Romanian town, injured his back under the weight of weapons he had to carry during a gun amnesty in 1999.
A police constable throughout his career, latterly a firearms instructor based in Guildford, Mr Dunford was unloading firearms for destruction at a Kent steelworks in November 1999 when he suffered the injury to his vertebra which ended his career.
The £61,388 settlement was agreed by Surrey's chief constable, Denis O'Connor, on Tuesday, the second day of a High Court hearing.
The payout will compensate him for his pain and suffering and loss of earnings since November 2001, when he was medically retired from the force.
Mr Dunford's counsel, Giles Eyre, had earlier told the High Court that officers involved in the operation should have been warned "as to the risk of injury from repeatedly throwing firearms out of the van by hand".
The chief constable denied liability in the case, but agreed to the settlement. Mr Dunford's legal bills will also be paid by the force.
Speaking after the hearing, the married father-of-two said although he was pleased with the payout, he was "very sad the accident occurred".
"It has had a major impact on my life. I am so sad I had to end a deeply satisfying career in such a way.
"Being in the police force was a very important part of my life. It was a very worthwhile role in which I felt I was well-suited and able to help others."
He said Surrey police had given him a great deal of support following the accident and that he is now involved in computer software development.
"There are things I can't do. I'm more limited in terms of house maintenance and DIY and I've had to pay builders and decorators to do things I would have done before."
The court had heard how Mr Dunford had been sent with four other officers on an operation to take a consignment of firearms from Surrey to Sheerness Steelworks in Kent for destruction.
Mr Eyre argued that Mr Dunford, who is 6ft 3ins tall, had not had enough room to stand upright in the back of the van while the guns were being unloaded.
He said: "It was necessary for him to stand in the confined space at the rear of the van, and repeatedly bend forward, pick up between one and three firearms, and twist to the side while throwing the firearms out of the van."