How to Calculate a Personal Injury Settlement
One of the first questions people at an initial consultation ask is how much money they can get for their personal injury lawsuit. When dealing with financial concerns after a severe injury, it is natural to be concerned about money.
As much as your personal injury lawyer wants to give an exact answer to this question, they cannot. The truth is that personal injury compensation depends entirely on you and what you went through after your accident.
The best information you can get is a comprehensive explanation of how personal injury compensation works instead of how to calculate a personal injury settlement.
Personal Injury Damages Based on the Individual Plaintiff
Personal injuries can affect different people in different ways. For example, a 65-year-old plaintiff who no longer works may have lower damages than a 25-year-old plaintiff at the beginning of their career. A marathon runner may be more profoundly affected by a broken leg than a person who is not active. As you can see, everything depends on how you respond to your personal injury and what your life was like beforehand.
When people ask about personal injury settlements, they usually inquire about the average number plaintiffs receive. In reality, that number should have very little practical meaning to you. When you hear of an average number, you do not know the circumstances the other person faced. You also do not know how hard they fought to get the money they deserved or whether they even fought.
There are many other facts that you do not know, including:
- Their age at the time of the injury
- What their life was like before the injury
- The other conditions that the accident may have caused
- Whether they had a lawyer
Instead, concern yourself with your situation. You may better understand what you deserve when you understand personal injury damages. Think of everything through your own perspective and lens.
The rule in a personal injury case is to take your victims as you find them. It does not matter whether the person who injured you knew of your own unique and particular situation. They are responsible for paying you compensation for how they have impacted your life.
For example, it does not matter whether you were prone to depression before the accident. If your personal injuries have caused you significant depression and anxiety, the person responsible must pay them. At the same time, if you were a higher-earning employee, you must be compensated for lost wages based on what you might have earned and not what the average person might have made.
Personal Injury Damages Use Money to Restore Your Position Before the Accident
Personal injury damages are supposed to restore you to the position that you were in the moment before the accident happened. Of course, compensation cannot restore your health to what it was, but money is used as a shorthand because that is the only remedy available to you.
In every personal injury case, you can recover economic and non-economic damages. Economic damages represent the money that came out of your pocket or that was supposed to come into your pocket that you can no longer earn. Non-economic damages represent the experience you have endured since the accident and will continue to go through in the future.
Economic Damages in a Personal Injury Case
One of the significant components of your economic damages is the full cost of your medical treatment. Your medical bills represent money from your pocket due to your personal injury. Not only is this money you have paid in the past, but it also includes all the money you will need to pay in the future for all aspects of your treatment.
Medical expenses include:
- The cost of your hospitalization
- Surgical fees
- Doctor’s office visits
- Prescription drugs
- Medical equipment
- Rehabilitation and Physical Therapy
When seeking compensation, it isn’t easy to know the future. This uncertainty is why you must work with an experienced personal injury lawyer. Your attorney will work with medical experts to understand the extent of medical treatment that you may need in the future. The last thing you want is only enough money to pay your medical bills and nothing left for you and your family.
The other major part of economic damages is lost wages. You are legally entitled to compensation for all the money you might have earned from your job but cannot because of your personal injuries. In addition, you are also eligible for compensation based on any reduction in your earning capacity. For example, if you were due a promotion in the future and your injuries rendered you unable to advance in your job, you can also receive compensation for the money you may have earned.
Again, you may not know now what is in store for you professionally, so you may not accurately calculate lost wages without lawyer’s help. They can work with vocational and economic experts to gauge what you might have learned in your job.
Even though these sound objective in nature, the insurance company can still find ways to muddy the waters. Although the amount you demand may seem straightforward to you, the insurance settlement offer might surprise you. They might underestimate the value of your claim, and you need a lawyer to review any settlement offers and negotiate for the full amount you deserve.
Insurance Companies Often Dispute Non-Economic Damages
Things get even more complicated when you are dealing with non-economic damages. By definition, these are more subjective. Non-economic damages compensate you for what you have gone through because of your injury. However, the insurance company has its own way of calculating non-economic damages that might not match your attorney’s calculations.
One of the significant components of non-economic damages is pain and suffering. This is an often-used term, but one that very few people actually understand. Pain and suffering damages pay you back for your ordeal.
Pain and suffering may represent the following aspects of your post-accident experience:
- The physical pain that you are dealing with because of your injuries
- The depression and anxiety that you feel because of what you are going through
- Your loss of enjoyment of life
- Permanent scarring and disfigurement
- Embarrassment and humiliation you feel after your accident
To stay consistent, insurance companies try to take the subjective and calculate these damages in an objective manner. There are different methods adjusters use to do so.
How Insurance Companies Calculate Pain and Suffering
In terms of pain and suffering, the insurance company has a calculation they try to use as a shorthand for your damages. The most common method that they use is called the multiplier method. The insurance company might take your medical bills and assign a multiplier based on what they believe to be the severity of your injury. More severe injuries, such as traumatic brain injuries and spinal cord injuries, will have higher multipliers attached to them.
The problem with the multiplier method is that it often takes your individualized experience out of the picture. The multiplier method regularly results in you receiving underpayment for pain and suffering. Accordingly, you need someone to tell your story and what you have gone through since the injury. You need a lawyer to show why the result from the multiplier method does not accurately reflect all that you have been through with your injuries.
The insurance company often uses a multiplier when you have more severe and permanent injuries. If you are dealing with more temporary injuries, the insurance adjuster may use the per diem method. In this calculation, the insurance company pays you daily for your pain and suffering. They more often use this method when there is a set duration of recovery from your injury. For example, if you have suffered a broken leg that will heal at a certain point in time, the adjuster might calculate an offer using a per diem basis.
No matter what method of calculation the adjuster uses to calculate your pain and suffering, you want a legal advocate to ensure it is enough. Insurance adjusters handle many claims each day, and they might use software to calculate settlement offers. Your personal injury lawyer evaluates your losses with your personal experience in mind and can provide evidence to adjusters that the objective calculation is inadequate.
This is only one of many reasons why you should always have legal representation during an injury claim. Your lawyer knows your individual pain when the insurance adjuster is not aware of all you have experienced due to your injuries. This allows your injury attorney to represent what your settlement should be worth to the adjuster.
The Insurance Company Should Not Dictate Your Damages
While people often ask how an insurance company calculates your personal injury settlement, the insurer does not have the sole voice on how much money you may receive. They can make an offer, but they are not in a position where they can dictate how much compensation you accept. You have a choice in the matter, and you can always reject an offer that your lawyer believes is too low. The insurance company and you can exchange numbers and agree on a settlement, but they do not get to decide anything unilaterally.
How much you can get in a personal injury settlement also depends on how you handle your case. If you try to handle your case independently and solely rely on the insurance company’s calculations, you might receive far less money. However, hiring an experienced personal injury lawyer may give you a better chance of maximizing your compensation.
Your settlement check will depend on how hard you negotiate. If you accept an early settlement offer that compensates you far less than you deserve, you will get less than someone who holds out in the face of low offers. Having a lawyer can help prevent you from unknowingly accepting less than you deserve, as you will have an idea from the start of how much your settlement should be.
You Can Often Get More Money by Having a Lawyer Negotiate for You
Two people in very similar situations may receive utterly different settlement amounts. One person may be grateful to get any offer and will take what the insurance company offers, while the other has an experienced personal injury lawyer advocating for them and negotiating for the total compensation they deserve.
We cannot overstate the importance of having a professional negotiating for you. Research shows that personal injury victims who hire experienced lawyers will end up with far more money than those who try to handle their own cases.
Do not fall into the trap of thinking you can end up with more money in your pocket if you try to handle matters on your own. Avoiding legal fees should not be the priority following an injury, as you might take home much less if you never reach out to an attorney.
If you do not hire a knowledgeable and experienced personal injury lawyer, you may never even know what your case is worth. You can end up agreeing to a settlement that pays you far less than you need without ever knowing it. Once you receive a settlement, you cannot go back and get more money because you already signed a release agreement.
Many people without representation accept an offer that is too low. They later learn that the settlement does not come close to covering their losses, and they must pay them. Once you release your rights in a settlement agreement, you cannot seek more compensation regarding this particular accident and injuries.
Never risk not knowing the full value of your injury-related losses. In a personal injury case, knowledge is power, and a lawyer gives you that, helping you level the playing field with the insurance company. Lawyers work with insurers all the time and can properly negotiate on your behalf. Contact us at G & K to get your consultation.