In order to negotiate a fair settlement for a personal injury claim or car accident, the first step is to calculate a reasonable sum of money you would be willing to accept to give up on your claim and not go to court. To get a starting point for settlement talks, injury attorneys and insurance companies alike rely on at least one formula. The same holds true for numerous other personal injury cases, such as slip and fall injury claims or bodily injury claims in car accident cases.
One typical formula employs the use of a multiplier and a plaintiff’s medical expenses to come up with a rough estimate of the amount of money they may be eligible to receive for pain and suffering (non-economic damages). The figure is then added to the plaintiff’s economic losses, including lost income, property damage, and medical bills, to get a final dollar amount negotiated.
Required Information for Compensation Estimates
The compensation a plaintiff is entitled to receive for a car accident settlement is the total cost of their car repairs plus their injuries. When vehicle damage is calculated, several essential details should be considered, including the condition it was in during the accident, the mileage, the depreciated amount, and the initial value of the vehicle. Once the cost of repairs is estimated, the plaintiff will need to figure out what parts will have to be replaced instead of providing an average cost to repair the damaged parts, such as rear-end damage.
There is no market price for a specific type of injury or body part, which is why injuries are more difficult to calculate than automobiles or car parts. Also, every person’s injuries are different. After the plaintiff’s attorney has obtained all of the information they need, a formula will be used to evaluate the value of their claim using the per diem method or the multiplier method, which are the most common.
How Insurance Adjusters Determine the Value of a Settlement Offer
If a plaintiff becomes involved in a car accident and has not sustained any pain or suffering, an insurance adjuster only has to add up their repair and medical bills. But in instances where pain and suffering and vehicle replacement are involved, an insurance company will provide extra compensation in addition to the amount a plaintiff will receive to cover their lost wages, vehicle replacement or repairs, and medical bills.
There are a variety of different methods insurance companies use to calculate a personal injury claim’s value. Most of them are different variants of the multiplier technique. Insurance companies determine the multiplier by using complex computer algorithms and rarely use whole numbers as multipliers, unlike attorneys. This equation, called the damage formula, is used by insurance companies to calculate a plaintiff’s pain and suffering.
The Multiplier Method
Lawyers and insurance companies typically calculate the cost of pain and suffering damages by using the multiplier method. A multiplier is applied to the total of damages and is based on the belief that injuries with more expensive damages, such as hospital bills, involve more severe car accidents and require a multiplier to determine the exact cost of the accident.
For example, if a plaintiff’s medical bills after a car accident are $7,000 and their injuries cost them $1,500 in lost wages, an attorney will multiply the sum of these two damages ($8,500) by a figure between one and five. The most common multiplier is three. The total amount of damages, in this case, would be $25,500.
Depending on the severity of a plaintiff’s injuries, the amount of recovery time, and any additional complicated circumstances, the multiplier will generally decrease or increase. More severe accidents may warrant a multiplier between a three and a four, while less severe cases such as a fender bender may warrant a multiplier between one and two. If more complicated circumstances are at play, the multiplier may be greater than five, such as an accident caused by someone driving under the influence. On the other hand, if a plaintiff’s negligence or behavior played a role in the accident, their attorney may calculate their pain and suffering using a lower multiplier.
The Damage Formula
Whenever a plaintiff attempts to negotiate a claim, the defendant’s insurance adjuster will determine the amount of medical expenses the plaintiff incurred due to the accident. These are known as special damages or medical special damages. In situations where the injuries are minor, an adjuster will multiply the amount of special damages by as little as one and a half to as much as three to determine the settlement offer amount for permanent disabilities, emotional damages, or pain and suffering (general damages). An adjuster will multiply the amount of special damages by five or more, along with lost income, in situations where the injuries are more painful and severe. This total, in most settlements, ends up being a starting point for claim negotiations.
As soon as a starting point for claim negotiations has been established, the settlement amount is likely to change. This is because additional facts about the accident and the injuries it caused will be revealed. Because multipliers can range from as little as one and a half to as much as five or greater, the damage formula has a wide value range.
The Per Diem Method
The per diem, or daily fee method, is another technique insurers and personal injury lawyers use to calculate pain and suffering damages. The per diem method generates a monetary amount that a plaintiff receives every day or week that they are suffering from their injuries following an accident.
Waiting For a Car Accident Settlement
In the aftermath of a car accident, victims are left with overwhelming emotional and financial struggles. Recovering from a car accident takes time and often requires medical attention. Vehicle repair bills and medical expenses will also add up. Victims may not be able to work in some instances due to their injuries in the car accident. Lawsuits for these accidents may take months or even years before a settlement is reached.
The Legal Funding Group understands that filing a car accident lawsuit can be expensive and time-consuming. Our car accident legal funding services can help you find financial stability while waiting for a settlement payout. Our application and approval process for this cash advance is quick and secure, so you can get the cash you need when you need it. No credit checks or financial background checks are required for approval.
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