How Is a Car Accident Settlement Determined?

Use these links to jump to different sections:

• How the Settlement Process Begins
• Calculating Economic Damages
• Calculating Non-Economic Damages
• Using the Multiplier Method
• Legal Help for Negotiating a Car Accident Settlement

If you or a loved one has been in a car accident, you may be considering filing a claim to recover your medical costs and other expenses. Most car accident claims are settled out of court through negotiation between the parties and their insurance companies. This article will explain the factors that determine the average car accident settlement, including categories of damages and damage multipliers.

How the Settlement Process Begins

Soon after an auto accident, your insurance provider or the at-fault party’s insurance company may reach out to you with a settlement offer. You should consult a car accident lawyer before accepting such initial payouts since many insurance companies will try to low-ball them.

To determine if you’re getting a fair settlement offer, your lawyer will gather evidence to establish who’s at fault for the car accident and calculate your economic and non-economic damages.

Calculating Economic Damages

Calculating economic or special damages is the first step in estimating compensation in a car accident settlement. Your lawyer will add up all of the following costs:

1. Past Medical Costs

Medical expenses include any medical care you received for bodily injuries from the car crash. You may have accrued bills for emergency medical interventions, surgeries, medications, and hospitals. Your attorney will gather evidence of these expenses through your medical bills and records.

2. Future Medical Expenses

Depending on the severity of your injuries, you may need physical therapy or ongoing medical treatment. You can seek compensation for these medical expenses even though you have not incurred them yet.

3. Past Lost Earnings

When recovering from an accident, you may need to miss work. You might be able to recover these lost wages through a car accident claim. To calculate your lost earnings, your attorney will consider how much you make and how long you had to be off work.

4. Future Lost Earnings

If you sustained an injury that will prevent you from working or that decreases your earning capacity, you can seek payment for these future losses. The dollar value of your future lost earnings will depend on what you earn and your age.

5. Property Damage

Your vehicle might have sustained substantial damage due to your car accident. In severe accidents, the automobile might be considered a total loss. In calculating your property damages, your lawyer will calculate the cost of automobile repair or replacement. This will depend on the type of car you were driving, its condition, and age.

Calculating Non-Economic Damages

The next step in estimating your injury settlement amount is to add your non-economic damages to your economic damages. Non-economic or general damages include emotional trauma or distress that result from a car accident. These include:

• Pain and suffering
• Loss of enjoyment
• Mental anguish
• Disfigurement
• Loss of consortium

As with economic damages, the amount of non-economic damages you can recover will depend on the details of your claim. In general, younger people tend to recover higher financial payouts for loss of enjoyment owing to the idea that they will probably suffer for more years than an older person. Another factor will be whether the injury will require ongoing treatment or cause disability.

Using the Multiplier Method

Non-economic damages are inherently difficult to calculate. Because non-economic damages are so subjective, many lawyers and insurance companies use a multiplier method to calculate them.

When using the multiplier method, lawyers or insurance adjusters will total your economic damages and multiply them by a certain number to get your non-economic damages. The number is based on the outcome of similar car accident injury claims in your jurisdiction, so it will change depending on your location, type of injuries, and other factors.

Generally, insurance adjusters and lawyers use a higher multiplier for more serious injuries. For example, a broken leg that will heal completely may be given a multiplier of one. However, a head injury requiring ongoing treatment may receive a multiplier of five. These multipliers are subject to change and vary by location.

Your state laws will also play a role in determining your settlement amount. In at-fault states, the person who caused the accident is responsible for paying damages. The at-fault driver will usually pay these damages through their insurance policy. However, in a no-fault state, you can collect an insurance payment even if the accident was your fault.

Further, there may be caps on non-economic damages under your state’s laws. So, it would be wise to contact an experienced car accident attorney in your area for a proper case evaluation.

Legal Help for Negotiating a Car Accident Settlement

While you deal with the personal impacts of a car accident, an experienced car accident attorney can handle all the aspects of your case, from gathering evidence to meeting important deadlines and filing paperwork. There may be a time limit on your ability to file a personal injury lawsuit in your state, and car insurance policies typically require prompt notification of a claim as well. So, contacting a personal injury lawyer as soon as possible is essential to preserve all your legal options.

Most personal injury attorneys offer free consultations, during which they can begin to estimate the value of your case and discuss next steps. Although lawyers can’t give an exact dollar amount, they can draw on their experience handling similar personal injury cases to give an informed estimate. You can also use this meeting to inquire about the attorney’s fee structure.

Visit the Super Lawyers directory to find an experienced car accident attorney in your area. See our overview of car accident cases to learn more about motor vehicle accident liability and compensation.