The "Average" Personal Injury Settlement

Claimants want to know if there is an "average" starting point for a personal injury settlement, but it's not that simple.

While the value of a personal injury settlement is a key concern for any claimant, there is no such thing as an "average" when it comes to a dollar amount you can expect to receive. Aside from there being about as many different types of personal injury cases as there are types of accidents, the details of any settlement will depend on the unique facts of each case. This article discusses some of the primary considerations that go into valuing a personal injury settlement, and explains why "average" numbers aren't necessarily helpful in trying to guess what a case is worth.

(To get a rough idea of what a settlement figure might be for an injury claim, try using AllLaw's Personal Injury Calculator to piece together the main factors and arrive at a starting point for settlement negotiations.)

How are Personal Injury Settlements Reached?

A personal injury settlement takes place when the person being sued (the defendant, usually through his or her insurer or attorney) agrees to pay the person suing (the plaintiff) some amount to make the plaintiff drop the case. Most personal injury cases end with a settlement, not a jury verdict, and many settle before a lawsuit is even filed. Learn about the advantages of settling a personal injury case.

To arrive at a settlement amount, both sides start out by determining on their own what they think the case is worth. Typically, personal injury attorneys and insurance adjusters rely on their practical experience, and they research similar cases to see what juries have awarded in the past, before factoring in any unique circumstances of the present case. If an insurance company is handling the defendant’s case, they might also have predetermined settlement amounts for different types of lawsuits.

Once both sides have established their rough estimate of an acceptable settlement amount, they will begin to send demand letters and settlement offers back and forth. As both sides gather facts and get a better idea of how likely it is the plaintiff will win or lose at trial, the amount of an acceptable settlement may go higher or lower. Once an acceptable offer is made, both sides will sign a settlement agreement and the plaintiff will sign a release giving up all rights to pursue a legal remedy over the underlying accident.

The Difference Between Median and Average

With a little bit of research, you can locate online resources and publications that give the median jury verdict or settlement for different types of personal injury cases. Some of these publications or websites might even refer to the number given as an "average." However, a median does not give an average or a ball park figure that anyone with a particular type of case can rely on.

The median is simply the middle range of all the cases combined, and there can be a very wide range. A few huge settlements or verdicts could make the median settlement or verdict number much higher than what a typical plaintiff might actually get. Keep in mind also that any such data is derived only from a sample set of cases. Once again, it is the individual factors of each case that matter most.

Key Factors Affecting Settlement Value

The Defendant's Assets. If a defendant simply doesn’t have the means to pay a settlement, either through his or her own funds or through an insurance company, then a high settlement isn’t possible, regardless of the facts of the case.

If a defendant loses at trial, the court can sell the defendant's assets or garnish their wages, but if there isn’t much to sell or garnish, there is no way to make the defendant come up with the money (here's where the old "you can't get blood from a stone" adage comes into play). A plaintiff needs to consider just how much a defendant is worth and/or the policy limits of any applicable insurance, when accepting or rejecting a settlement offer. Learn more about collecting a settlement or judgment in a personal injury case.

The Plaintiff's Losses ("Damages"). The claimant's damages in a personal injury case include all medical expenses, lost income and other concrete financial losses caused by the defendant, as well as compensation for the plaintiff’s pain and suffering. If a defendant has acted intentionally or with gross negligence, punitive damages may also be available.

Depending on the facts of the case, concrete damages like medical expenses might be low, but the plaintiff’s potential recovery for pain and suffering might be quite high. Both sides will likely have a similar idea of what the range of concrete damages could be at trial, although items like future medical expenses could be contentious.

Learn more about the settlement formula in a personal injury case.

Researching the outcome of similar cases can give the parties an idea of the broad range of possible verdicts. But the jury is permitted to award physical and emotional pain and suffering damages based on its own assessment of what would “make the plaintiff whole,” so prior awards in similar cases may not help much.

Punitive damages are designed to punish the defendant, therefore the richer the defendant, the higher the potential punitive damages. If the defendant is a large corporation, or other very wealthy entity, and the plaintiff has evidence of serious wrongdoing, the defendant may offer to pay a bigger settlement to avoid the risk of having to pay punitive damages after losing at trial.

Liability. The final factor is just how strong the plaintiff’s case is against the defendant, i.e. whether the defendant is liable.

Although potential damages might be high, there may be little or no evidence that the defendant's wrongdoing actually caused the plaintiff’s damages. Unless the case is fairly clear-cut one way or the other when it comes to who was at fault, neither side will be entirely confident that they can win the case at trial. As depositions are taken and evidence is gathered, a clearer picture may emerge of what the likely outcome will be in terms of a liability finding.

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