If you're making an injury insurance claim after a car accident, you're probably wondering what your claim is actually worth. Insurance companies use various methods to calculate the value of a personal injury claim, which generally includes compensation for actual medical bills and lost wages, coupled with some amount of money for “pain and suffering.” This article addresses how to calculate the value of a car accident claim.
The Multiplier Method
An often-used method for evaluating pain and suffering damages is to multiple the actual damages (medical bills and lost wages) by a certain number. Many personal injury lawyers have been trained to multiply the actual damages by three to reach a reasonable damages amount. So, if your medical bills were $5,000.00 and your lost wages were $1,000.00, you would multiple $6,000.00 by 3 for a total of $18,000.00.
In recent years, however, insurance companies have become more reluctant to automatically concede that a multiple of three is a reasonable way to quantify pain and suffering damages.
Now, the approach is often to take the actual damages and multiply that amount by a figure that is arrived at through the use of complex software programs, and the result will often undervalue your claim. The multiplier generally depends on the seriousness of your injuries, any aggravating circumstances, and the length of your recovery. For instance, if you suffer a broken femur and undergo multiple surgeries, the pain and suffering you experience is naturally going to be worse than that from a minor fender bender.
So, in the more serious accident, the multiplier might be three or four, whereas in the fender bender, the multiplier might be 1 or 2. The multiplier might be even higher if there are aggravating circumstances, such as the at-fault driver being intoxicated. In that case, you might reasonably use a higher multiplier. Likewise, if your own actions (or inactions) were partly to blame for the accident, it is reasonable to use a lower multiplier to evaluate your compensable pain and suffering.
It is also important to consider the type of treatment received in relation to the injuries incurred in choosing a reasonable multiplier. Some injury claimants seek an excessive amount of medical care in relationship to the injury sustained. For instance, one might obtain three or four months of chiropractic care of physical therapy for a minor injury. Insurance companies are usually unwilling to consider excessive medical treatment in their calculation of pain and suffering.
So, don’t keep treating for minor injuries in the hope that this will increase the value of your case. Over-treating injuries can often backfire, leaving you with unpaid medical bills and insufficient compensation.
The Daily Rate Method
Some insurers and personal injury attorneys use a daily rate to calculate the pain and suffering aspect of an injury claim. Under a daily rate or “per diem” calculation, an amount of money is assigned to each day (or week) that you suffer from injury after a car accident.
For example, suppose you incurred medical bills in the amount of $5,000.00 and lost income of $1,000.00 for a total of $6,000.00. For three months after the accident you saw a physician regularly and took daily pain medication. After about three months, the pain eased and you were able to resume normal activities again. You might assign a daily value of $200.00. Under the per diem method, you would multiple 90 days (3 months) by $200.00 to reach $18,000.00.
How do you choose the daily rate? One way might be to rely on the income you would make in a given day if you were not injured. So, if you typically earned $200.00 per day, but were unable to go to work, this might be a reasonable method of valuation.
While it may seem arbitrary to choose a per diem number, you should be able to articulate a legitimate reason for why you chose that amount. This is because when you take your case to a judge or jury, you cannot simply state “my pain and suffering is worth $200.00 per day.” Rather, you will need to offer the jury or judge a reason upon which they can base such an award.
Getting a Final Value
Probably the most efficient and systematic way to value your claim is to use both the multiplier and per diem method to get a ballpark figure. From there you need to adjust your expectations based on a variety of factors, such as the severity of your injuries, whether others were involved and injured, the permanence of any injury, whether you were out of work for an extended period of time or laid off as a result of not working, and whether you believe you will make a strong witness on your own behalf.
Applying all these factors together will help you create a reasonable value for your claim. For instance, if your multiplier gives you a value of $18,000.00 and your per diem gives you a value of $30,000.00, you might choose a ballpark figure of $24,000.00. If you suffered a broken bone, underwent surgery, and may have a permanent limp, you should add some amount to your valuation. On the other hand, if you had a sprained wrist and the accident was partly your fault, you should subtract from that $24,000.00 figure.
Once you come up with a number that you're comfortable with as a starting point for settlement negotiations, it's time to craft your demand letter.