How Does My Insurance Calculate My Personal Injury Settlement?
When you’ve been injured in an accident, you can’t always rely on the insurance company to provide fair compensation for all your damages. Unfortunately, insurance companies are businesses, first and foremost, so they prioritize their profit margins over offering fair settlements. When you partner with a personal injury attorney, you can push for even more from the insurance company, but you may need to know where to begin before you can negotiate. Understanding how insurance companies and attorneys calculate personal injury settlements can help you stay informed of the process and feel empowered to participate in your own recovery.
Determining Your Damages
Before any personal injury settlement is offered, insurance companies will often identify your damages first. “Damages” refers to any negative impacts that you may have endured as a result of the accident or injury. Insurance companies begin with tangible damages that can be more easily compensated. For example, companies may look at bills for:
- Medical care,
- Therapy services,
- Lost or damaged property,
- And medical devices
This is often the baseline personal injury settlement many clients will initially receive. Noticeably absent from this list, however, are the non-monetary damages such as emotional distress, pain and suffering, and trauma. It also does not account for punitive damages which are designed to hold entities accountable for gross negligence or malicious actions.
The “Damage Formula”
To calculate the noneconomic damages associated with a client’s injury, insurance companies may use one of three possible methods. The first and most common method is the “damage formula.” This method of calculating personal injury settlements classifies the client’s noneconomic damages (the emotional or mental toll of an injury or accident) as mild, moderate, or severe/lifelong. For each level of severity, the insurance company multiplies the sum of all economic damages (all tangible bills added together) by three, four, or even five times. This is then added to the sum of tangible damages.
The Multiplier Method
The multiplier method is very similar to the damage formula, though it’s not quite so precise. With this method, insurance companies take the sum of the tangible damages and multiply it by anywhere from two to five times – usually three times. They then add this multiplied result to the original sum.
The Per Diem Method
This method is more unusual, but it is still in use. Clients and attorneys negotiate with the insurance company to come to a dollar amount to be charged per day the client spends recovering from their injury. The insurance company then multiplies the agreed-upon daily rate by the number of days the client is afflicted with their injury.
Frequently Asked Questions
Does my personal injury attorney have any say in what the insurance offers?
Yes! Personal injury attorneys are specially trained in aggressive negotiation tactics to push for the maximum compensation for their clients. Using the evidence at their disposal and these skills, attorneys can often double or even triple a client’s personal injury settlement.
How do I know if my settlement is fair?
What is fair for a personal injury settlement depends largely on the extent of the injury and its far-reaching impacts. A personal injury attorney in California can help you determine what a case like yours typically recovers and can identify any circumstances that may demand even more.
What is the average personal injury settlement?
The average personal injury settlement ranges from $10,000 to $75,000. However, clients can often expect more depending on the severity of their injuries and the amount of negligence or malice involved in their accident.
How to Retain a Fair Personal Injury Attorney in California
If you were injured due to another’s negligence, you may be eligible to collect compensation. Follow these steps to contact a personal injury attorney with BD&J, PC.
- Collect documentation on your injury. Medical and therapy bills, property loss, and other evidence of your injury and distress can help your attorney bring your case.
- Contact our personal injury team here. Complete our form to receive a call from one of our team members regarding your potential case. Our lawyers will review the information you provide and begin the process of filing.
- Stay in contact with us. Our personal injury attorneys will keep you informed as your claim progresses. However, we empower our clients to participate in their claim and may need to discuss the process with you.
Negotiating for Maximum Recovery for Clients Across California
For more than 20 years, our team of experienced negotiators and advocates have helped thousands of Californians recover more than $2 billion* in compensation for their injuries. At BD&J, we believe you deserve the maximum recovery for your injury so you can adjust to your new normal. Let our team fight for you every step of the way. Contact us today to schedule a free consultation with any of our award-winning attorneys.
