If, God forbid, you’re injured due to someone else’s negligence, you’re likely grappling with medical bills, lost income, and immeasurable pain and suffering. In such cases, an injury claim becomes an important part of your road to recovery. Filing one helps recoup your expenses and covers your immediate and future losses. More importantly, it can help restore your pre-incident life as much as possible.
Understanding how to calculate personal injury settlements can feel like looking into a complex legal black box. While the process involves various considerations, it’s not an unsolvable mystery. Every case is unique, but there are common principles and injury settlement formulas that help establish what your claim might be worth. We’ll discuss these and the key elements that affect the final payoff amounts.
Understand the Tangible and Intangible Costs
Personal injury claims can come from the losses caused by tangible and intangible effects of a car accident, medical malpractice, or product liability issues. Quantifiable losses are categorized as special damages, while non-economic losses are also known as general damages.
Economic Damages
Bodily injury claims cover current and future out-of-pocket expenses related to your injury. On top of surgeries, consultations, and hospital bills, these could include costs for physical therapy or other long-term medical care. You can also seek a property damage award if the injury-causing accident inflicted damages to your asset.
If your injury has prevented you from working, you’re entitled to receive compensation for lost income. Incidents with long-term effects, for instance, auto accidents involving traumatic brain injury, indicate loss of earning capacity. Including it in your claim can cushion your future expenses even if you secure a lower-paying job.
Non-Economic Damages
Pain and suffering awards compensate individuals for both physical pain and emotional distress. These types of damages are harder to calculate because they often don’t come with a paper trail. Even so, they form part of a just settlement.
Apart from suffering, an insurance investigation evaluates the emotional damages and psychological impacts resulting from the accident and injury. Individuals who’ve developed anxiety, depression, sleep disturbances, and post-traumatic stress disorder can claim damages under this category. So are those whose quality of life and relationships (loss of consortium) have been greatly affected.
Both are considered compensatory damages and aim to restore a person’s condition before the accident. In a few cases, the court can award punitive damages to sanction a liable party’s deplorable actions. Each state has its guidelines on calculating and awarding them.
As no circumstance is the same, it’s best to consult with a personal injury lawyer as soon as possible to know how you can move forward. Legal experts are relevant whether you decide to file a personal injury case or not. They understand the nuances of the law and can help maximize your chances of getting the most favorable results.
Common Methods Used to Determine Settlement Amounts
Since non-economic damages are subjective, how do you put value on them? Insurance adjusters and personal injury lawyers often use the multiplier and per diem methods as personal injury settlement calculators:
The Multiplier Method
You must add all your quantifiable economic losses to calculate your non-economic damages. Using the said figure, assign a multiplier—usually from 1.5 to five, depending on the severity of the injury, the length and possibility of recovery, the amount of pain, and its impact on your daily life. Thus, your calculation should look like this:
Economic Damages + non-economic damages (economic damages x multiplier) = Estimated settlement
Let’s say you’ve incurred USD$ 20,000 in economic damages, and you have moderate injuries, prompting your lawyer to assign a pain and suffering multiplier of three. Using the multiplier formula, your estimated settlement would be:
20,000 for economic losses + (20,000 x3) for non-economic damages = 80,000
Minor injuries with quick recovery projections often carry a multiplier of two, while moderate ones carry three or four. Lawyers can assign five or higher in cases involving severe and permanent injuries.
The Per Diem Method
The damage awarded to individuals under this scheme is measured by the day. Hence, the most critical step is to set the daily rate and determine how long you’ve experienced it.
Such a calculation method would give you this formula: PD= DR x D. PD represents the total per diem damages, DR stands for the monetary value for each day of pain and suffering, and D for the total number of days you experienced intense physical and emotional hardship.
Daily rates often reflect a person’s daily earnings or may show a flat rate determined by the severity of the injury and its impact. In the same vein, the duration often starts from the date of injury until they reach a reasonable point of recovery, also known as maximum medical improvement (MMI).
For example, you earn USD$ 300 per day. You were injured and experienced debilitating pain for 90 days until your doctor declared you at MMI. Using the per diem method, expect to receive USD$ 27,000 (300 x 90 days).
The per diem method works best when an injured person has suffered minor injuries and has a clear recovery timeline. Conversely, the multiplier method is ideal for accidents involving permanent disabilities, chronic conditions, and other long-term consequences.
Some forward-thinking law firms are integrating artificial intelligence (AI) to reduce repetitive tasks, including calculating potential bodily injury settlements. Algorithms study historical and current data to come up with claim amounts. Even as technology makes operations more efficient, lawyers still need to exercise their judgment and experience in most processes, including providing tailored legal advice and advocating for their clients.
Factors That Influence the Final Settlement Amount
It’s crucial to note that the pain and suffering calculators above can only compute ballpark figures. While they provide a good starting point, other aspects can either add or reduce the final settlement costs, for example:
State Rules on Liability
Your personal injury claim payout is greatly affected by the state’s rules on determining fault and liability. A shared fault means an insurer or the court can reduce your settlement accordingly.
In pure comparative fault states like New York, for example, a plaintiff can ask for damages even if they’re found partially responsible for the incident. The damages are reduced based on the percentage of their fault. In states that follow the modified comparative negligence rule, a plaintiff who’s found 50% or 51% at fault can’t recover their losses.
Some might find this harsh, but it still offers better hope than the contributory negligence doctrine, which prohibits individuals from recovering damages if their carelessness has minimally contributed to their losses. Alabama, Virginia, North Carolina, Maryland, and the District of Columbia all adhere to this rule, so exercise extreme caution when you’re in these areas.
Strength of Evidence
An injured party should keep copies of their medical records, police reports, witness statements, videos, and other documentation that proves their injuries and explains how they occurred. Strong evidence is key to establishing negligence, which is crucial whether filing an insurance claim or seeking a settlement or a personal injury award from the court.
Insurance Policy Limits
Even if you’re not liable for the incident, the at-fault party’s insurance limits might put a cap on how much you’ll receive. When your insurer acts in bad faith, or if it denies your claims, you can work with personal injury attorneys to push for a reasonable insurance settlement in or out of court.
Having personal injury protection or PIP coverage is important in these situations, as these policies cover your medical treatment bills and a portion of your lost income—regardless of who is at fault. Some auto insurance policies often offer this type of protection, particularly in no-fault states.
Your Attorney’s Skills and Experience
Skilled legal representatives know how personal injury law claims and settlements work. As such, they can help value your claim accurately, negotiate with insurance companies, and present a strong case in court if necessary.
After assessing the damages, your attorney will present a demand to the at-fault party’s insurance company. The latter will most likely respond with a lower counteroffer, and this will test your attorney’s negotiating power.
Laws and precedents can vary from state to state, and this could have a great impact on how cases are valued and litigated. Most of the time, both sides would rather choose to negotiate a personal injury settlement than have a full-blown lawsuit.
Final Thoughts
There’s no one-size-fits-all approach to calculating fair compensation for personal injuries. It’s a complex process influenced by legal precedents, the unique circumstances of your case, the strength of your evidence, and the negotiation skills of both parties involved. Understanding these contributing factors and working closely with a personal injury lawyer equips you with the right tools to manage this challenging journey.
