Understanding what you’re entitled to (and what the limitations could be) helps to manage expectations for a legal claim after an accident
You were in a car accident (no fault of your own, of course) and the damages are minor, but you're outraged. Inconvenienced. The other driver had a bad attitude. You didn't require medical treatment, and insurance is covering damage to your vehicle.
But shouldn't the other driver have to pay something for putting you through this hassle?
We've all seen it on TV (or maybe in real life) when a very incensed person has been wronged and they vow to sue the "villain" for every penny they have. That (sometimes) makes for good television, but that's not how lawsuits work in reality.
You can't sue someone just because you're angry or inconvenienced. You can't even sue for being wronged, unless that wrong caused an injury that left you with financial losses.
Generally, you can recover personal injury damages for costs that include:
- Medical treatment, including doctor or hospital visits, surgery, prescription medication, ongoing rehabilitative therapies, diagnostics like X-rays, etc.
- Lost wages, including loss of future earning capacity from your injury (in other words, if your injury recovery prevents you from returning to the same job at the same pay rate as you had prior to the accident)
- Pain and suffering
- Emotional distress and loss of consortium
- Wrongful death, if the accident resulted in the loss of a family member
Each of these types of damages falls into 1 of 2 categories: economic loss or non-economic loss.
Economic damages are losses that have a specific financial value. For instance, you can determine exactly how much your medical expenses were from an accident by totaling the amounts on all of your related medical bills. You can also total the amount of your lost wages.
Putting a cost, or "dollar value", on non-economic damages like pain and suffering or a loss of companionship is more difficult. The legal system has formulas that it uses to figure out how much a plaintiff's non-financial costs are and translate them into a monetary amount.
Therefore, it can be difficult to quantify how much you should recover from an accident.
Factors that determine payout amount for a car accident
There are some statistics that show average payouts for various types of car accidents. Bear in mind that the final value of your case will depend in part on where you live, among other factors. If you're in a metro area with a high cost of living, for instance, your payout would likely be higher than if you live in a place with a lower cost of living.
In general, these are the first things your lawyer would consider in assessing a settlement amount:
The purpose of insurance is so that an accident can be covered without having to file costly and time-consuming lawsuits. Depending on the laws of your state (whether you're in an at-fault jurisdiction or a no-fault jurisdiction), your lawyer would look at all feasible options for insurance payouts.
This would include:
- Your own insurance policy coverage and limits
- The other driver's insurance policy coverage and limits
- Coverage on your uninsured or underinsured motorist policies
Damage to your vehicle
Your property loss would be assessed as minor, significant, or totaled. Your lawyer would likely request a quote from a body shop independent of your insurance company to get an assessment of damage costs.
Often, the largest costs for an accident are physical injuries, particularly if there's more than 1 person who was injured.
There are a few questions that would need to be answered:
- Were your injuries resolved with initial treatment? (In other words, you no longer require treatment for injuries resulting from the accident.)
- Are you still experiencing symptoms related to the accident injury (like chronic pain, headaches, etc.)?
- What type of injury did you endure? A minor sprain, strain, bruising, or laceration would be less severe than a brain injury, broken bones, spinal cord injuries, or injuries to internal organs.
Lost wages, past and future
If you've recovered from your injury and returned to work at the same job and pay rate as prior to the accident, you can easily calculate how much it cost you in wages based on the amount of time you had to take off from work.
But if the accident-related injuries have left you still unable to work, unable to work at the same job you had before, or you have a long-term or permanent disability, then you need to figure out how much you're losing in wages for the foreseeable future.
Your lawyer can determine what your lifetime earning capacity would have been if the accident hadn't happened and what it is now as a result of your injuries. The difference is part of what you should receive as damages.
How does the insurance company calculate the value of a claim?
The industry standard for several of the large insurers in the U.S. is a software application called Colossus. Colossus calculates settlement values for car accidents for at least half of the insurance claims in the nation and is used by many of the largest insurers, including Allstate, Farmers, Metlife, USAA, and others.
Colossus uses computer-generated rules (like an algorithm) that ask questions related to your claim. The adjuster enters data into the system and the software determines a mathematically fair settlement offer based on that information.
Can software gauge how injuries make you feel or their effects on your life?
NO. Definitely not.
But it does add "severity points" to your injuries, and the software multiplies the amount of money offered based on certain injury codes.
For instance, if the adjuster enters symptoms like headaches, muscle pain, nausea, depression, or other things into the Colossus system, it would be considered a "value driver" that could raise the amount of your settlement. The software also factors in whether you were hospitalized, the type of treatment you received, and whether you have an ongoing physical impairment or disability.
But here's another "fun fact":
A study performed by McKinsey & Company reported that a person who is represented by a lawyer might cost an insurance company up to 4 times more than a person who does not have an attorney.
Why is this true?
Because a person without legal counsel is more likely to accept a settlement that's lower than what they deserve. That's why an insurance company will often actively pursue you with a settlement offer, so that it can convince you to accept it before you have a chance to explore other options.
How can I calculate the value of pain and suffering?
There are 2 methods the courts use to determine what a plaintiff can recover for pain and suffering.
The Multiplier Method
There's a scale from 1 to 5 that's generally used to calculate pain and suffering. If your injuries are very severe, like spinal cord damage, brain injury, or amputation or disfigurement, then you'd multiply the amount of your economic losses by a higher number like 4 or 5. If your injuries are likely to fully heal or are less serious, you might multiply by 1 or 2.
Sometimes, the equation will look like this:
The Per Diem Method
If you've made a full recovery (or are expected to), you can calculate pain and suffering damages by multiplying a set amount by the number of days in which you suffered.
In other words, your lawyer might negotiate that your pain and suffering cost you $100 per day for your recovery time, which was 3 months. That would mean you'd expect to receive about $9,000 in damages for pain and suffering.
Can I calculate the value of my car accident claim?
It really depends on the severity of your injuries.
Begin by calculating the total of all receipts or bills you have related to the accident — everything from vehicle repairs to medical treatments.
If you've already had your vehicle repaired and your medical treatment is complete, you might be able to stop there. Whatever expenses you had would be the cost you're owed.
But if the insurance company's settlement offer doesn't cover the full extent of your expenses, you need to contact a personal injury lawyer.
In addition, if you will have expenses that haven't yet happened (future medical treatment or extended time off from work), then an attorney is the best person to calculate those anticipated costs. You might be surprised to learn that your compensation from accident injuries is more than you expect — and if you accept a settlement from the insurance company that turns out to be too low, there's no going back.