If you’ve been in a car accident, you might be wondering how much your settlement should be worth. While it might seem to make sense to try to find the average as a starting point, it really has much more to do with your individual situation.
The reason being that insurance companies don’t simply pay out an average amount; instead, they calculate damages and use common methods for determining how much – and how little – they can pay in compensation.
Ultimately, this means car accident victims need to understand how to calculate the different damages caused by the accident to ensure they receive a fair amount. How much are you facing in medical bills? How expensive will your car repairs or replacement be? Will you miss work – and income – because of your injuries? The answers to these questions will help you begin to understand how much your settlement should be worth.
That said, it’s not just about expenses like car repairs and medical bills. It’s also about the pain and suffering you have had to endure – and might still have to endure – as a result of the accident.
But how do you put a price on pain and suffering? Let’s take a look at some of the common methods.
How to Calculate All Damages
Truth be told, there is no hard-and-fast rule for calculating accident settlement amounts. One of the methods insurance companies often use is multipliers. That is, they add together all of your financial losses and multiply them by a number, generally from 2 to 3, to account for the other non-financial losses, like pain and suffering.
Your financial losses could include:
- Medical bills (past and future): Medical care is expensive and treatment isn’t always straightforward. If you suffer whiplash or a traumatic brain injury, for example, it can take specialists, multiple treatments and medications, and even surgery. Your injuries might also require ongoing treatment or therapy, which should also be factored into your financial losses.
- Lost wages: Lost wages due to not being able to work can feel like insult added to injury. Not only are you facing a growing pile of medical bills, but your ability to make money to pay for them is also taken away. Don’t worry – the money you lose from not being able to work after an injury should also be paid for in your total compensation.
- Property damage: You’re likely also dealing with a damaged – if not destroyed – vehicle. You might also have damage to other property in your vehicle. All of these losses should be factored in as well.
So, if you incur $20,000 in total financial losses as a result of the accident, your settlement offer will likely be in the $40,000-$60,000 range to account for the trauma you have experienced from the accident and injury.
That said, there are several factors that can come into play to make this number higher or lower. These include:
- Past medical conditions
- The amount of time elapsed from injury to seeking medical treatment
- Whether or not your treatment was appropriate for the injuries you sustained
Ultimately, the multiplier that is used will depend on the severity of your injury, since the cost of medical treatment is generally a reflection of the severity of pain and suffering. For example, if you only have $1,000 in medical bills, the injuries probably were not very severe, meaning the pain and suffering you’re facing are also probably not very severe. Hence, a lower multiplier, such as 1, might be used here.
On the other hand, if you’re facing $100,000 in medical bills, your injury was likely very serious. This means that the effect on your mental health and overall well-being was also very serious, meaning a jury will be more likely to award you a higher amount in compensation for that pain and suffering.
Again, there is no exact formula and it depends on many variables which the insurance company will review in great detail.
Insurance Companies Will Pay You as Little as Legally Possible
When you are first contacted by the insurance company, they will probably seem very nice and friendly – like they have your best interests in mind.
But make no mistake, their job is to pay you as little compensation as possible. Insurance companies are big businesses that do everything they can within the law to pay car accident victims the minimum for their injuries.
That said, they also want to avoid going to court and will try to provide an amount they believe you will accept. But they do tend to provide lowball first offers. They can always offer more, so why would they offer a lot when the accident victim might take a little?
They will view it as the beginning of a negotiation, a hope that you will take a low offer so they can wash their hands of the situation.
You need to view it the same way: as a negotiation. If the insurance company offers a great amount out of the gate, and you’re certain you’re considering all of your damages, then you should by all means take it. Unfortunately, in our experience, this is not usually the case.
You will likely need to push back to make sure you get the compensation you deserve. However, this can be difficult. It’s important to come across as both confident and reasonable, which is why it’s important to work with an attorney.
Daily Rate Method
The daily rate method – also known as the “per diem” method – is another way to calculate the pain and suffering you have endured as a result of the accident.
The idea here is to come up with a daily amount to attempt to quantify your suffering, multiplied by the number of days you have endured pain from your injury.
Generally, you would use your salary at your current or most recent job to calculate this number. If your yearly salary is $75,000 ($300 per working day), for example, and you are dealing with pain for 6 months (180 days), the total amount for your pain and suffering would be $54,000.
This method doesn’t usually work well for injuries that result in long-term pain, but can be effective in some cases.
Ultimately, every case is unique and it’s important to consider the specifics of your accident to come to the right amount. But understanding these common methods for quantifying your pain and suffering can be an important way to show that you understand how personal injury cases work, and an attorney can help ensure you reach the right amount when deliberating with insurance companies.
However, once you do reach the right amount to demand in compensation, you could still face some difficult roadblocks.
Maximum Liability Coverage
Say you’re in an accident that has caused $150,000 in damages. You might expect the other driver’s insurance to cover this full amount.
While that might be the case, it depends on the other driver’s maximum liability coverage. If they only have $100,000 in liability insurance, then the situation becomes more complicated because the insurance company is only required to pay out a maximum of $100,000.
In Nebraska, you are only required to have $25,000 per person and $50,000 per accident in liability coverage, so this scenario certainly happens.
What do you do if it happens to you?
Generally, you will need to file an additional claim with your own insurance company. Most policies have underinsured driver coverage to address this situation. So, if you have $150,000 in damages and the other driver’s insurance covers $100,000, then your underinsured coverage would cover the additional $50,000.
But again, it depends on your own policy, and the additional claim will mean you will have to work with two insurance companies to receive full compensation. You might also need to look into filing a claim with your insurance company if the driver was uninsured altogether.
In these types of cases, it’s especially important to work with a lawyer who understands the nuances and can find the best way to obtain compensation for you.
How Much More Can I Get With a Car Accident Attorney?
Generally, personal injury lawyers – including car accident lawyers – work on a contingency fee basis. This means their payment is a percentage of the total compensation, but they don’t get paid unless and until they win compensation for their client.
This fee is usually around 33 1/3%, meaning a settlement of $60,000 would result in about $20,000 in attorney fees.
So, you might be wondering if hiring a lawyer is worth it, and how much more you could possibly get in compensation if you did.
While there is no absolute rule – after all, every case is different – there have been some studies done to attempt to quantify this question.
For example, Nolo, a popular website dedicated to helping people understand their legal situations and make informed decisions, found the following after conducting a reader poll:
- Those who hired a lawyer and received compensation walked away with $77,600 on average. Those who received compensation without hiring a lawyer walked away with just $17,700 on average (almost 450% more received when working with an attorney).
- 91% of those who hired a lawyer received compensation, while only 51% received compensation without hiring a lawyer.
In other words, not only does hiring a lawyer greatly increase the amount of compensation most people receive, but it also makes it almost twice as likely they will receive any payout at all.
The Representation You Need for the Compensation You Deserve
At Hauptman, O’Brien, Wolf & Lathrop, we are experienced car accident attorneys with a track record of winning cases, and we always put our clients’ best interests first.
We can help negotiate with your insurance company to help you receive the right amount in compensation, but we’re also always ready to go to court when necessary.
If you’ve been injured in an accident and are evaluating your options, don’t hesitate to reach out for a free case review to tell your story and get some trustworthy, expert advice on what to do next.