The first step in negotiating a settlement for a car accident or personal injury claim is calculating a reasonable amount of money you would accept to give up your legal claim. Most insurance companies and injury attorneys rely on one formula or another to get a starting point for settlement talks. This is true for a bodily injury claim in a car accident case, a slip and fall injury claim, or any other personal injury case.

A common formula employs a multiplier (explained in detail below) and your medical expenses to come up with an estimate of non-economic damages (money for your pain and suffering). This figure is added to your economic losses (medical bills, property damage, and lost income) to get to a dollar amount from which you can negotiate. This is what the calculator below can help you achieve.

This is not legal advice and we're not your lawyer. The calculation here is for instructional purposes only. Consult an attorney for a financial and legal analysis of your case.

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Damages and The Multiplier

After you enter your numbers and click "Calculate," the two dollar figures you see above the "Your Total Settlement Estimate" field represent the two main types of damages that arise in the majority of injury cases: economic losses (called “special” damages) and non-economic losses (called “general” damages). In any injury-related insurance claim, or even a personal injury lawsuit filed in civil court, the losses suffered by the person who has been injured can be placed into one of these two categories.

Special damages are those losses that are easy to quantify. They include the costs of medical treatment, any lost income due to time missed at work, property damage caused by the accident, and other out-of-pocket losses.

General damages, on the other hand, aren’t so easy to quantify. They include a sub-category of damages known as pain and suffering, which means the physical discomfort, mental anxiety, stress, and similar negative effects of the injuries -- as well as the impact that the injuries have on the claimant’s day-to-day life.

So, how do you put a dollar value on these kinds of losses? That’s where the multiplier comes in. To get a dollar figure that might represent the value of the general damages, an insurance adjuster will add up all the "special" medical damages (remember those are your quantifiable losses) and multiply that total by a number between 1.5 and 5 (that’s the multiplier).

The multiplier will be lower or higher depending on a number of specific facts related to your case: How bad are your injuries? How much medical treatment have you received? How much treatment will you need in the future? Are you expected to make a full recovery? Will there be permanent or long-lasting effects? How have the accident and your injuries impacted your daily life? The list goes on.

Of course, which multiplier to use will likely itself be a point of contention. You’ll argue for the use of a higher multiplier (4 or 5, for example) while the adjuster is likely to push for a lower multiplier (perhaps 2 or 3).

For more information on coming up with the right multiplier, see Determining a Multiplier to Value Your Personal Injury Case

But once the multiplier is used to arrive at a general damages figure, adding that number to the special damages total will give the insurance adjuster (and you) a ballpark idea of the value of your claim, or at least a starting point for settlement negotiations.

More Information

To get a good understanding of how these types of formulas work during personal injury settlement negotiations, you need to learn the basics of damages and compensation. Start by reading the articles we have filed under Personal Injury Damages and Compensation.

You may also want to familiarize yourself with the injury claims process and get a real sense of what to expect when it's time to talk settlement. To get started, check out our section on Settling Your Personal Injury Case.

Adjust Your Settlement Target for Your Own Fault

You may need to reduce your target settlement amount if your own carelessness "contributed" to the accident. Depending on the state in which the accident occurred, the law requires a jury award to be reduced by your percentage of fault -- and in a few cases, to zero. The three basic types of "contributory" and "comparative" negligence rules are as follows:

Pure Comparative Negligence States

In the following states, the dollar amount of your award would be reduced by your percentage of fault, with no limits:

Modified Comparative Negligence States

In the following states, the dollar amount of your award would be reduced by your percentage of fault. If your own fault is greater than 50%, you cannot win any damages, so the settlement value of your case is much less than your damages, and maybe zero.

Contributory Negligence States

The following states have a very harsh rule on shared fault. You cannot win any damages if you are found to be even 1% at fault. If the evidence shows that your own carelessness contributed to your injuries, you cannot win an award in a lawsuit, so your estimated settlement value is nearly zero.

Do Not Admit Any Fault During Your Settlement Negotiations

When making your initial demand, do not admit any liability. If you raise the issue, deny any liability for the accident, and let the other side make the argument that your settlement should be reduced. To better understand this issue, see Shared Blame: Comparative and Contributory Fault for a Personal Injury.