Calculating a car accident settlement involves many factors, including the severity of injuries and the amount of property damage. There is no universal formula that insurance companies and car accident lawyers use. Arriving at the right settlement figure takes diligent research, extensive legal knowledge, and relevant experience.
If you leave calculating your car accident settlement in the hands of the insurance company, it’s very unlikely they will take into account the full impact of your accident. To give yourself the best chance of achieving a fair settlement, you need to work with an experienced personal injury attorney.
This article will explore how car accident attorneys calculate fair settlements for their clients. We will also look at why using online calculators and doing it alone is unlikely to secure you the car accident settlement you need to rebuild your life.
Considering Types of Car Accident Damages
Car accident settlements are made up of two types of damages:
- Special damages: Also known as economic losses, which are relatively ascertainable, these commonly include medical expenses or property damage. In other words, it is easier to apply a dollar figure to these damages.
- General damages: Non-monetary losses, also known as non-economic damages, that result from the accident, including suffering and emotional trauma. Clearly, it’s more challenging to quantify pain and suffering damages and the like in terms of dollar amounts.
However, before a personal injury attorney can begin to calculate your settlement, he or she must identify the at-fault party (or parties) who will receive your car accident claim.
Step 1: Determining Liability
The process for pursuing a car accident injury settlement varies slightly, depending on where the accident took place. Therefore, it’s important to consult an experienced car accident lawyer who practices in that jurisdiction.
For example, Massachusetts is a no-fault insurance state. This means that, after a Massachusetts car accident, you must first turn to your insurer for compensation – no matter who is at fault.
By law, every Massachusetts driver must have the following coverages:
- Bodily injury to others
- Personal injury protection (PIP)
- Bodily injury caused by uninsured auto
- Damage to someone else’s property
If you get injured in a car accident, your PIP policy covers you, your passengers, and pedestrians. It will cover your medical expenses and up to 75 percent of your lost wages. This may sound great, but it comes with a relatively low limit of $8,000.
If you are injured in a hit-and-run accident, you should be protected by the “bodily injury caused by uninsured auto” policy. The minimum coverage required is $20,000 per person or $40,000 for all people injured in the incident.
When PIP is not enough
A common problem is when a victim has been seriously injured in a car accident and $8,000 is not going to come close to covering his or her losses. That’s why Massachusetts law allows victims to pursue a settlement by means of car accident claims filed against the at-fault parties liable to cover losses.
Identifying the liable party
Identifying who was at fault in a car accident can be complicated, especially if multiple vehicles were involved. If the road was poorly maintained or a pedestrian also contributed to the accident, the case can become even more tricky.
Additionally, Massachusetts follows the legal doctrine of comparative negligence. Thus, if you were less than 51 percent to blame for the accident, you can still pursue compensation.
In such cases, the amount of compensation you receive will be reduced by the level of blame you bear in the accident. Naturally, there are some exceptions. That’s why the counsel of a qualified Massachusetts car accident attorney is crucial.
Once your personal injury lawyer has determined who is liable, he or she can begin to research your losses and calculate the settlement value.
Step 2: Medical Expenses
The first type of special damages a personal injury lawyer will investigate is medical expenses. These include the costs you have already incurred and your future medical expenses related to your car accident injuries.
In many cases, you may choose not to agree on an accident settlement until you have fully recovered or reached maximum medical improvement. Doing so will allow your car accident attorney to evaluate the full impact of your injuries.
To assist your car accident lawyer in calculating your expenses, provide him or her with the following records:
- Medical bills
- Ongoing medical treatment
When car accidents cause severe injuries, medical bills can soon add up to tens or even hundreds of thousands of dollars. Medical providers may place a medical lien on any future car accident compensation to recover expenses. Health insurers also have the right to do this to recover accident-related expenses. Your personal injury lawyer will take this into account when making the calculations.
It’s critical that both your accumulated economic damages and your future needs are accurately assessed when calculating a personal injury settlement. If you have suffered catastrophic injuries, this will ensure that you have the right medical treatment and caretaker support for the rest of your life. To this end, personal injury attorneys may consult medical experts to get an understanding of your long-term needs.
Step 3: Property Damage
Also under the category of special or economic damages, property damage includes harm done to things rather than people. The most obvious form of property damage in a car accident claim is the damage done to your vehicle. Yet, this can also apply to other items with you at the time of the accident, such as laptops, phones, and tools.
Step 4: Lost Earnings and Future Lost Income
A serious car accident may mean spending weeks or months away from work as you recover. In some cases, it may mean that you can no longer do the work you did before or else you may be unable to work entirely.
This impact of your collision is a critical part of the car accident settlement calculation. This may include lost wages or business opportunities, plus the loss of your future earning capacity.
Step 5: Calculate General Damages
After quantifying the special damages, attorneys and insurance adjusters will turn their attention to calculating general damages. These may include the following:
- Pain and suffering
- Emotional distress
- Loss of consortium (normal marital relationship and intimacy)
It is not easy to put a dollar figure on such losses. Therefore, to calculate pain and suffering damages, car accident attorneys and most auto insurance companies use either the “multiplier” or “per diem” method.
Method 1: Multiplier
The multiplier method uses an auto accident settlement formula that begins by totaling the special damages. Those damages are then multiplied by a number ranging from 1.5 to 5. The multiplier chosen depends on the severity of your injuries.
For the least severe injuries, a lower multiplier, such as 1.5 or 2, may be appropriate. Serious injuries that lead to long-term disabilities will be at the higher end of the scale.
Factors affecting the multiplier
When choosing the multiplier, the car accident attorney or insurance adjuster may consider:
- How serious are the car accident victim’s injuries?
- Will he or she make a complete recovery?
- How much medical treatment has the victim already received?
- How much medical treatment will he or she need in the future?
- What is the impact of the injury on his or her work or daily life?
Sometimes, the same injury may result in different multipliers.
For example, imagine two people each breaking three fingers in car accidents. Both suffer discomfort, but one is able to return to work and carry out his or her normal duties after a couple of days.
The other, though, is a concert pianist. He or she has to cancel many upcoming performances. This results in much more stress, anxiety, and potential career damage.
For the first person, the multiplier may be assessed at the lower end of the scale. Yet, for the pianist, the impact is much greater, so the multiplier would be higher.
Negotiating the settlement
As you would expect, your car accident attorney and insurance adjusters are likely to argue over the multiplier. An experienced lawyer knows how to fight to prove the multiplier he or she has chosen is justified. In turn, insurance adjusters will look for any possible way to lower the multiplier to reduce the amount the insurance company pays out.
Most cases can be settled by negotiation. However, if the insurance company refuses to offer an acceptable settlement amount, you have the right to go to court to pursue fair damages.
Method 2: Per diem
Per diem is simply a legal term meaning “per day.” The per diem method is most commonly used when the car accident victim is expected to make a complete recovery.
This method puts a dollar figure on each day that you experience suffering due to a car accident injury. It then multiplies that figure by the number of days you either have experienced suffering or are likely to suffer.
For example, if the per diem was set at $130 and your suffering was estimated to last for 90 days, you may receive pain and suffering compensation of $11,700.
Considering the Problem With Car Accident Settlement Calculators
Many online car accident settlement calculators promise to give you an accurate estimate of your potential damages. But can they really provide an accurate result?
As we have seen above, car accident settlements are calculated based on many different factors. Simply totaling your medical costs and property damage and choosing a multiplier method is not enough to give you an accurate target settlement amount.
Rather, calculating a realistic level of damages is a painstaking task that takes extensive legal knowledge, financial acumen, and experience. Relying on an online calculator and accepting the first offer from the insurance company could leave you shortchanged and facing an uncertain future.
It is much better to take your time and work with an experienced lawyer who will not back down. He or she could help you achieve a settlement that lets you face the future with confidence.
Considering the Average Car Accident Settlement
The Insurance Information Institute (III) reports that the average bodily injury payout was $22,734 in 2021. Yet, the fact is that there are no comprehensive national or statewide statistics for average settlements.
Every car accident is unique. Some result in minor injuries, while others are life-changing or even fatal. Car accident settlement amounts reflect the severity of the injuries. So, knowing the average car accident settlement amount would not be particularly useful anyway.
What is much more useful is to ask a skilled car accident lawyer for a ballpark settlement figure. He or she will draw on experience with previous cases to give you an estimate in your case. Of course, it is important to remember that this number will only be an estimate; the final figure will either be negotiated out of court or ruled on by a judge or jury.
When choosing a personal injury lawyer, take a look at the firm’s car accident results. While they cannot guarantee that you will obtain the same car accident settlement, they can show whether the firm has a track record of winning similar cases.
Talk to Your Trusted Massachusetts Car Accident Lawyers
Thankfully, most of us are rarely involved in a car accident. So when you do find yourself in this situation, make sure you choose a law firm with an outstanding track record in fighting – and winning – similar car accident claims.
Kiley Law Group has been fighting for the rights of Massachusetts car accident victims over the past 40 years and counting. Through the decades, we have won over $1 billion in compensation for our personal injury clients in total. This figure includes many individual car accident settlements in excess of $1 million each.
Our clients don’t just praise our results. In their testimonials, they often focus on the integrity and moral principles we display during the process of pursuing their claims. That’s because we truly respect and value each client and our commitment to delivering the very highest standards of customer service stands out.
Don’t accept an unfair car accident settlement from an insurance company that does not have your best interests at heart. Instead, schedule a free case evaluation with a Kiley Law Group car accident lawyer by calling 888.979.9323 or contacting us online today.