Visitor Question

Calculating proper compensation for totaled car and medical treatment?

Submitted By: Al (Rhode Island)

Two and a half months ago I was at a red light and I was rear ended by a BMW X5 going about 40 mph. I sustained neck and back injuries, and my car was totaled, for an amount of $8,100. I am expecting about another month of physical therapy and chiropractic treatment.

My medical and out of pocket bill currently are about $5,000. This accident happened in Rhode Island. Do I calculate $13,100 x 3 = $39,300 – $8,100, for a settlement value of 31,200? Or is this calculated another way? Also, will they offer more if I want an annuity paid over say 3-5 years?

Thank you.

Disclaimer: Our response is not formal legal advice and does not create an attorney-client relationship. It is generic legal information based on the very limited information provided. Do not rely upon the information in our response, or anywhere else on this site, when deciding the proper course of a legal matter. Always get a personalized case review from a local attorney.


Dear Al,

The basis upon which you are calculating your settlement demand is flawed. Property damage costs aren’t normally included in the calculation of a settlement demand.

In almost all cases, only medicals are used as a basis upon which a multiple is used. In your case, your medicals are five thousand dollars. As a result, multiplying your medicals by three means your settlement demand should be about fifteen thousand dollars.

Structured settlement annuities are issued by insurance companies to compensate plaintiffs in personal injury claims.

Prior to 1982, personal injury plaintiffs were consistently paid by insurance companies with lump-sum cash settlements. In 1982 the IRS Code was modified to accord tax free status for payments made to personal injury victims based on annuities paid by insurance companies.

In practice, an annuity payment can constitute greater compensation for you. This is because the insurance gets to keep their money longer and invest it in stocks, bonds, etc. Their hope is to make profits in excess of the percentage of money they will pay out to you over the course of the annuity.

The above is general information. Laws change frequently, and across jurisdictions. You should get a personalized case evaluation from a licensed attorney. Find a local attorney to give you a free case review here , or call (888) 647-2490.

Best of luck,

Published: August 27, 2014

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