How Is Your Personal Injury Settlement Calculated?

Personal injuries affect the lives of victims differently. If you are lucky, one doctor’s visit may be enough. But not everyone is as lucky. Some injuries can have life-changing consequences, such as lengthy and complicated treatment procedures, disability, disfigurement, or even death.

If your injuries result from another party’s negligence and you intend to file a claim, you may wonder how you arrived at the value of your settlement. Each case is different, so there cannot be one figure.

But the process of getting to the figure is largely the same. This article looks at how personal injury settlements are calculated and can be a good read for help determining a rough estimate of what to expect.

Recoverable Damages

The value of your settlement will equal the damages you can prove in your claim, which fall into two main categories: economic and non-economic damages.

In some rare cases, you may recover punitive damages applied as a punishment to the defendant in cases involving gross negligence.

Calculating Economic Damages

Economic damages are relatively straightforward. These are any financial expenses that directly result from your injuries, such as medical bills, medication costs, lost wages, property damage, etc. All you need to do is get a sum of these losses.

“Some formulas may apply to lost wages if your injuries rob you of the ability to earn a living for an extended period or you suffer permanent disability. Working with a lawyer can help validate these claims,” says injury attorney Maxwell Paderewski of Lone Star Injury Attorneys, PLLC.

Calculating Non-Economic Damages

Non-economic damages refer to intangible losses such as emotional distress, pain and suffering, disfigurement, and disability. Calculating non-economic damages involves applying formulas that often require a lawyer’s help. Lawyers can choose between the multiplier and the per diem formula when calculating non-economic damages.

The multiplier option involves multiplying the total economic damages by a number between one and five, known as the multiplier, which increases with the severity of the injuries.

The per diem option, on the other hand, compensates the victim for every day of suffering. The per diem rate depends on several factors, such as the victim’s income and the severity of the injuries. There is also room for negotiations between the two sides.

Factors Affecting the Value of a Claim

The severity of the injuries is a significant factor in the value of a claim for obvious reasons. Severe injuries require extended and comprehensive treatment, which results in high medical expenses. They are also likely to result in extended days off work and more non-economic damages.

Your part in causing the accident will also affect the value of your settlement. In states with a contributory negligence approach to fault, any fault on your part means losing your right to compensation. However, most states have a comparative negligence approach, meaning the victim can only recover damages relative to their contribution to the accident.

Insurance policy limits may also affect what you recover. For example, suppose a court values your damages at $600,000, but the defendant’s coverage is capped at $200,000. In that case, their insurer will pay $200,000, leaving you to recover the remainder from the defendant, who may not be financially able to foot the bill.

Other factors include state laws, such as recoverable damage caps, and the quality of your legal representation, which will impact the value of your settlement.