Types of Compensation You Can Claim in an Injury Accident
If you get hurt because of someone else’s bad behavior, you have the right to hold that person responsible by filing a personal injury claim with a personal injury lawyer. When you file a personal injury claim against another person, you are effectively demanding compensation (money) from them in return for your losses, which you would never have experienced if not for the other person’s actions.
No amount of money can truly make up for the pain and terror of an unexpected injury, so you might be curious about the types and amounts of compensation available in a personal injury claim. In this blog, Gallagher & Kennedy discusses how you can get money for your injuries, the types of compensation you can claim, and the factors that could affect your overall settlement value.
Sources of Compensation for Preventable Injuries
When you suffer a preventable injury in an unexpected accident, you have three options for seeking compensation: filing a first-party insurance claim, filing a third-party insurance claim, or filing a personal injury lawsuit.
Here are the key differences:
- Filing a first-party insurance claim. A first-party insurance claim is a claim you file with your own insurance provider. For instance, if you got hurt in a car accident and had no-fault medical payments (MedPay) coverage, you could file a first-party insurance claim with your own provider to receive compensation.
- Filing a third-party insurance claim. A third-party insurance claim is a claim you file with someone else’s insurance provider when they are at fault for your injuries. For instance, if another driver causes a car accident that injures you, you would file a third-party insurance claim with their provider for compensation.
- Filing a personal injury lawsuit. First-party and third-party insurance claims proceed outside the court system. But when injury victims cannot negotiate fair settlements with insurance companies or have no insurance policies available, they can file personal injury lawsuits. If a personal injury trial reaches a verdict, the verdict is legally binding for both parties, though subject to appeal.
In some cases, you might have grounds for multiple insurance claims or lawsuits after an injury accident. Also, some insurance claims end up in court when the parties cannot agree on a settlement value. However, most injury cases settle out-of-court because everyone wants to avoid the time and expense of a lawsuit. Even when an injury case goes to trial, settlement negotiations often continue behind the scenes, sometimes until right before the verdict.
Types of Compensation Available for Injury Victims
When you have a personal injury claim against another party, the term “damages” refers to the compensation you receive from them for your injuries. In most personal injury cases, both parties negotiate and ultimately settle on the amount of money you receive in damages. In rare circumstances, personal injury cases make it all the way to trial, and a judge or jury determines how much, if any, to award in damages.
There are three key types of damages in a personal injury claim:
The biggest chunk of most personal injury settlements and verdicts comes from “economic” or “special” damages. Economic damages reimburse you for any out-of-pocket expenses you incur due to your injuries.
Common types of economic damages include compensation for:
- Medical expenses. Medical costs you incur now and in the future due to your injuries, including the costs of ambulance rides, hospital stays, doctor’s office visits, diagnostic tests, surgical procedures, therapy sessions, durable medical equipment, and prescription medications.
- Lost wages. The value of losses in your take-home pay due to any time you miss from work while you recover from your injuries. “Lost wages” can include your base hourly or salaried wages, expected tips or bonuses, and the value of any sick days or paid time off (PTO) you had to use.
- Lost earning capacity. The projected value of losses in your future earning ability if your injuries leave you with long-term or permanent impairments that affect your ability to work.
- Property damage. The costs of repairing any property of yours that sustained damage in the accident, such as a vehicle or bike. If your property is a total loss, meaning the repair costs would exceed the property’s market value, you could receive money for a replacement.
- Incidental costs. The value of incidental, out-of-pocket losses you incur as a result of your injuries. This compensation could include the costs of traveling to and from accident-related medical appointments, hiring in-home assistance, or making vehicle accessibility modifications.
Non-economic damages compensate you for intangible, subjective losses you incur due to your injuries. Unlike economic damages, which you usually calculate by adding specific dollar amounts from bills and other expenses, non-economic damages have no definitive dollar values and are, therefore, much harder to calculate.
Non-economic damages could include compensation for:
- Pain and suffering. The physical discomfort, emotional distress, and mental anguish you endure due to your injuries.
- Permanent disfigurement. Permanent bodily disfigurements, such as amputation or extensive scarring.
- Loss of quality of life. Losses in your general well-being and ability to enjoy and participate in life.
- Loss of consortium. A spouse’s or domestic partner’s loss of their loved one’s affection and intimate attention due to the injury accident.
Both economic and non-economic damages are types of “compensatory” damages, which aim to return injury victims to the financial condition they were in before the accident by reimbursing them for losses that never should have occurred in the first place. On the other hand, punitive damages aim to punish at-fault parties for extremely bad behavior.
Punitive damages are only available in cases that go to trial, and judges only award them in rare circumstances. The standard of proof is higher for punitive damages, as you must show clear and convincing evidence that the other party acted with intentional malice or extreme recklessness to obtain them.
Some states impose statutory damage caps on personal injury claims, limiting the compensation you can receive for your injuries. But Arizona isn’t one of them. The Arizona Constitution explicitly prohibits legislators from making any law that limits damages for death or personal injury claims.
Factors That Affect Compensation for Personal Injury Claims
The same types of compensation are available in many personal injury cases. Still, every case has different factors that affect how much compensation you receive for each of your injury-related losses.
Some key factors that could affect compensation in your personal injury case include:
- The sources of compensation available. The more options you have for filing a claim, the more likely you are to get full compensation for your losses. Seeking compensation from multiple sources is especially useful when the value of your claim exceeds the limits of a given insurance policy.
- The severity of your injuries. If your injuries are severe, you might need more expensive treatment over a longer period. Medical costs often make up the bulk of the value of a personal injury claim, so additional medical expenses increase the overall amount of compensation due.
- Any pre-existing health conditions. If you have pre-existing health conditions that affect the same body parts as your injuries, the insurance company might use this fact as an excuse to avoid paying your claim. An attorney can help you present extensive documentation of your pre-existing condition and how the new injuries have worsened your condition.
- How your injuries affect your work. Some injuries significantly affect your ability to work. If your injuries affect your ability to continue doing your job while you recover, you could receive money for lost wages. If your injuries prevent you from ever doing your job again, you could receive money for job retraining. And if your injuries prevent you from ever working in any capacity again, you could receive disability compensation.
- Whether you were partially at fault. Under Arizona law, you can still seek compensation from someone else if you are partially at fault for your injuries. Some states prohibit you from seeking compensation if you are 50 or 51 percent at fault, but in Arizona, you can file a claim against another at-fault party even if you are 99 percent at fault for the accident yourself. However, the amount of money you can obtain decreases based on the percentage of fault you contributed to the accident.
- Your efforts to mitigate further injuries. Insurance companies expect you to mitigate the damage and injuries you suffer, which means taking steps to prevent your losses from worsening. For instance, you might mitigate damage to a broken leg by canceling a hiking trip and getting plenty of rest. The insurance company could reduce your compensation if you fail to mitigate damages.
Calculating the Value of Non-Economic Damages
Calculating non-economic damages is often more challenging than calculating economic damages because there’s no perfect way to assign a dollar value to pain, suffering, or quality of life. In most injury cases, attorneys calculate non-economic losses using either the multiplier method or the per diem method.
With the multiplier method, you calculate non-economic damages by taking the total value of your economic damages and multiplying it by a number called a multiplier., with higher multipliers for more severe cases.
With the per diem or daily rate method, you calculate non-economic damages by assigning a specific dollar value to each day you must live with the effects of your injuries. Then, you multiply this dollar value by the number of days it takes you to recover from your injuries.
Neither the multiplier method nor the per diem method is perfect, but they are the best tools we have to calculate non-economic damages, which are extremely important. After all, the negative effects of a preventable injury go beyond hospital bills and lost income, and injury victims deserve compensation for intangible losses, too.
Collecting Compensation After a Successful Claim
Getting compensation after a successful insurance claim is usually simple. Once you accept a fair offer, you sign a release form, and the insurance company sends a settlement check to your attorney. Getting money after a trial verdict is often more complicated since you might need to wait while the other party files an appeal.
In either case, there are usually two key ways you can accept the money for your claim: in a lump sum payment or as part of a structured settlement. Each type of payment structure has its advantages and disadvantages.
When you accept a lump sum payment, you get all of the money for your claim at once. A lump sum payment is great when you have large outstanding bills because you can pay them all off at once. However, lump sums do have their drawbacks.
With that much money hitting your bank account at one time, it’s easy to overspend on wasteful purchases. And while compensation for medical expenses is not taxable, other types of compensation are, so you could have a high tax burden if you get a large lump sum.
When you accept a structured settlement, you break up your money into smaller chunks, which you receive in installments over time. Structured settlements are good for long-term finances because they force you to adhere to a budget of sorts. Smaller payments from a structured settlement could also reduce your tax burden by decreasing your annual reportable income. However, a structured settlement might not be the right choice if you need lots of cash immediately for a big purchase.
The best way to determine how much money you could receive and how to accept it is to discuss your injury case with a knowledgeable lawyer. An experienced attorney can evaluate the specifics of your situation, identify all possible sources of compensation for your losses, and work to maximize the value of your settlement.