How are Car Accident Settlements Calculated?

In California, approximately 250,000 people are injured in car accidents every year. Some of them suffer so severely, their lives will never be the same. If you were injured in an accident, you probably have heard you can collect for your damages, but what does that really mean? This means you are entitled to receive compensation from the negligent party who was responsible for the accident that caused your injuries.

Although each case is different, a car accident settlement should include both economic and noneconomic damages. There may be other damages also available.

Economic Damages

Economic damages are those that can be mathematically calculated. They are the actual amounts you lose, or expenses that you will incur in the future. Some examples are:

• All paid or outstanding medical expenses, including the ambulance, hospital, doctor visits, physical therapy, medical tests, etc.
• All future expected medical expenses if ongoing care and therapy are reasonably necessary
• Payment for transportation costs if travel is required for medical treatment
• Costs for child care, household help, and other aides who are necessary as a result of the injury
• All wages lost, both current and future
• Lost earning capacity

Often times, these calculations are complex and require evaluations from experts in various fields (medicine, vocational rehabilitation, and economics) to determine your expected reasonable future losses. Once compiled, these numbers are added together.  This aggregate amount is the full amount of economic damages.

Noneconomic Damages

California law mandates that an award of personal injury damages for economic loss must also include an award of noneconomic damages as well.  We often hear the phrase “noneconomic damages” used interchangeably with “pain and suffering.” In truth, pain and suffering is merely a portion of noneconomic damages.  California Civil Jury Instruction 3905A permits recovery for injury to the following areas past and future personal noneconomic losses:

• Physical pain
• Mental suffering
• Loss of enjoyment of life
• Disfigurement
• Physical impairment
• Inconvenience
• Grief
• Anxiety
• Humiliation
• Emotional distress

Unlike economic damages, where we can easily calculate the amount of a medical bill or the hourly value of lost time from work, noneconomic losses are generally more difficult to calculate because they value the human cost of injury.  As one can imagine, a person with a broken leg will not receive as much as someone who ends up in a vegetative state from a traumatic brain injury. When factoring in each of the above areas of losses, the substantial impact of losing the effectiveness of one’s life is more profound in the latter category.  However, that stark contrast should not minimize the personal loss and impact on life someone receives who has a broken arm.

For example, perhaps the broken arm prevented an elderly person from playing or picking up their grandchild for the rest of their life.  Such an impact is dramatic and a potentially permanent loss.  It is essential to have an advocate who is willing and capable to understand the holistic impact your injury has on you and your family.  After taking considerable time to truly understand and empathize with these losses, the attorney must then effectively communicate these impacts to a jury. Here at the Law Office of Daniel J. O’Neill, our attorneys are expertly trained through continuing education, notably at Trial Lawyers College, in this area and have a history of results to show for it.

Insurance companies, their attorneys, and their adjusters take separate approaches; they often rely on biases to undermine these damages.  In some cases, they attempt to reduce these losses to economic formulas.  Several methods used by insurance adjusters to formulaically calculate damages for noneconomic damages, such as:

• Using a multiplier: This method used to be more popular insurers, but has diminished in use in recent years. The dollar amount of your economic damages is multiplied by three. This may undervalue your claim depending on your own personal circumstances. Your personal injury attorney will negotiate or attempt to prove at trial a higher number if your losses have been egregious, such as you lost a limb, will be unable to return to your former job, or will need ongoing medical care.
• Per diem: This is based on the amount of money you lose every day due to your injury. One example of how to calculate this is to determine how much you lose every day due to being unable to work. That loss is multiplied by the number of days it takes you to recover from your injury.
• Combination of multiplier and per diem: This is essentially a compromise between the two methods. For example, if the multiplier comes up with a $20,000 loss and the per diem method comes up with a $10,000 loss, $15,000 may be a good compromise.
• Some insurers use computer programs to evaluate noneconomic claims.  Such programs rely on diagnostic codes, the likelihood of future disability, age, other settlements and verdicts, etc.

Regardless of how an insurance company measures your non-economic losses, the final amount depends on how you or your attorney communicates how the accident changed your life.

Why You Need an Attorney to Help

Insurance adjusters are employed by the insurance company. No matter how sympathetic they may seem, their job is to save their company money. They have a reputation for making low offers to those who are not represented by an attorney. The offer either may not include things like future medical expenses or damages for pain and suffering.

When you are losing money from being unable to work, you may be tempted to accept the offer without realizing that the extent and seriousness of your injury has not yet been determined. An attorney will take the burden from you and advocate for you to obtain just compensation.

For more than 35 years, the attorneys at the Law Office of Daniel J. O’Neill have been helping clients obtain all the compensation to which they are legally entitled. The law requires you to bring your claim for damages within a certain period of time after the date of your accident. If you miss the deadline, you lose your right to pursue your claim. Contact us today for a free initial consultation.