Car Accident Compensation: How to Calculate and Maximize Your Payout

Get every dollar of insurance money you’re entitled to after a car accident. See the types of damages you can claim and how to calculate your settlement.

The amount of car accident compensation you receive depends on several factors.

Medical expenses have the biggest effect on the value of accident claims. The type and extent of your injuries directly affects your payout. Other factors include lost wages, out-of-pocket expenses, and the extent of pain and suffering.

When you know all the types of damages you can claim and how to calculate your settlement, you will be in a strong position to maximize your accident compensation.

Types of Damages After a Car Accident

You can pursue two main types of compensation after a car accident:

  1. Economic damages – Also known as special damages, or hard costs, these are measurable losses that can be verified by bills, receipts, and statements of value.
  2. Non-economic damages – Also called general damages, more commonly known as pain and suffering, these are losses that can’t be measured by a bill or receipt, but may be justified by evidence showing the impact of the accident on your daily activities.

1. Economic Damages

All expenses related to your auto accident injuries should be included in your claim, even if some or all of your costs did not come directly out of your pocket.

Economic damages include:

  • Medical costs for diagnosis, treatment, and physical therapy
  • Expenses for medical supplies and equipment
  • The cost of prescribed and over-the-counter medications
  • Lost wages and other lost income, such as sick days
  • Transportation costs to and from medical appointments
  • Replacement services, such as lawn mowing, child care, and other tasks you had to hire out
  • Replacement or repair costs for personal property

2. Non-Economic Damages

There’s no objective way to measure pain and suffering after a car accident. The emotional toll it takes can vary widely depending on the person and circumstances. However, most auto insurance adjusters are willing to pay a reasonable amount for a victim’s suffering after an accident.

Non-economic damages include:

  • The pain suffered from injuries
  • Emotional distress caused by the circumstances of the crash
  • Reduced enjoyment of life
  • The effect of permanent injuries or scarring

How to Calculate Car Accident Compensation

Car accident claims are usually settled through negotiations with the at-fault party’s insurance company. If you have recovered from minor injuries, you might decide to handle your claim on your own.

A common way to calculate your claim’s settlement value is the three-step multiplier method.

Step 1: Add Up Your Economic Damages

Add up all your medical expenses, lost wages, transportation costs, and any other accident-related expenses you can document. Here’s a checklist to track your car accident damages.

Be sure to use the full amount charged for your medical appointments and tests, even if part or all of the medical payments were covered by health insurance or workers’ compensation.

Some medical procedures generate two bills. For example, if you had an X-ray, there should be a bill from the facility and a separate bill from the radiologist who interpreted the results. Don’t forget to include both bills.

Step 2: Account For Your Pain and Suffering

Take the total of your economic damages from step 1 and multiply that amount by 1-2x to get an amount you can claim for non-economic damages.

Be reasonable about the amount of your pain and suffering. If you only had one doctor visit after the crash for some bumps and bruises, a multiple of one is probably appropriate. If you had a broken wrist that limited your activities for a few weeks, a multiple of two is justifiable.

Serious injury claims can get multiples of 3-5x or even higher. These cases are complicated and should only be handled by an experienced attorney.

Step 3: Combine Both Amounts

Add your economic and non-economic losses together to arrive at a reasonable estimate of your insurance claim’s value.

Sample calculation for a minor car accident settlement:

Total economic costs: $750

Non-economic losses: $1,125 ($750 x 1.5)

Estimated settlement value: $1,875 ($750 + $1,125)

In this case, you can make a fair settlement demand for $2,000 to the insurance company. Expect to negotiate down from there to reach a compromised settlement.

Complicated or severe injury claims should be handled by an experienced personal injury attorney. Most car accident attorneys offer free consultations to injury victims.

Who Pays For Your Losses After an Accident?

Who ultimately pays for your damages depends on the specifics of your car accident case, including the scope of your injuries, the vehicles involved, and the available insurance coverage.

Regardless of how your medical care is paid for, it’s always a good idea to get treatment as soon as possible after an accident.

No-Fault Auto Insurance

If you live in a no-fault insurance state, you must first turn to your own insurance company for bodily injury claims, no matter who caused the crash. Personal Injury Protection (PIP) insurance does not cover pain and suffering.

Most no-fault states have a “serious injury threshold.” If your injuries exceed this threshold, you can pursue a liability claim, including pain and suffering, against the at-fault driver’s insurance company.

Bodily Injury Liability Insurance

Every state requires drivers to carry a minimum amount of auto insurance coverage for bodily injury and property damage.

In a no-fault state, the at-fault driver’s insurance comes into play when you’ve exhausted your PIP coverage. In other states, you will file your claim against the at-fault driver’s insurance policy from the start.

Uninsured and Underinsured Motorist Coverage

A person driving without valid insurance is an uninsured motorist. Most states require drivers to carry a minimum amount of uninsured motorist coverage in case they are hurt in an accident caused by an uninsured driver.

Some states only require uninsured motorist bodily injury coverage and some also require uninsured motorist property damage coverage.

Underinsured motorist coverage is typically optional. It kicks in if you are severely injured by a driver who only carries the bare minimum of insurance.

Other Insurance Policies

In severe injury cases, your attorney will look beyond the at-fault driver’s primary car insurance for other insurance that may apply.

Potential insurance sources may include:

  • Separate insurance policies carried by divorced parents of an at-fault teen driver
  • An umbrella policy carried by the driver
  • Auto insurance carried by the vehicle owner, if different from the driver
  • Insurance carried by other drivers involved in a multi-car accident

If you or a loved one were severely injured by a drunk driver, your attorney may be able to use your state’s Dram Shop laws to pursue compensation from the bar or party host who served alcohol to the at-fault driver.

A good car accident lawyer may be able to locate other types of coverage that you wouldn’t be able to uncover on your own.

Property Damage Claims

The at-fault driver is always responsible for your car and personal property damage, regardless of where the accident takes place.

Some people find it easier and faster to use their own collision coverage to get their car fixed. Their insurance company will then go after the other insurance company to get reimbursed for the money they spent.

Common Car Accident Injuries and Average Payout

Nationwide, the average insurance settlement for car accident injuries is $20,235.¹

Car accident injury settlement amounts can vary widely. The settlement value of your claim will largely depend on the scope of your personal injuries and medical care. The amount of compensation may be limited by the available insurance coverage and the personal assets of the liable parties.

Soft Tissue Injuries

Muscles, tendons, and ligaments are the most common soft tissues injured in car accidents. The impact of a collision may cause the upper body to be violently “whiplashed.” This movement can cause bruising, contusions, lacerations, sprains, and strains.

Insurance companies are reluctant to pay fair compensation for whiplash injuries and other soft-tissue claims. Because injuries to muscles and tendons don’t show up on X-rays or CT scans, insurance adjusters are skeptical when a claimant says they are in pain and unable to work because of their injuries.

Minor soft-tissue injury claims, arising from low-impact collisions, can often be settled quickly for the cost of the initial medical exam, a day or two off work, and a small amount for your inconvenience.

Musculoskeletal Injuries

The same forces that cause soft-tissue injuries in a car crash can result in more serious injuries throughout the body.

Fractures can range from clean breaks to compression fractures that require surgical repair. A person’s head, arms, knees, legs, ribs, spine, and pelvis are all vulnerable to fracture in motor vehicle accidents. The resulting medical bills depend on the severity of the fracture.

Joint damage to knees or shoulders often requires micro-surgical repair and a long period of rehabilitation.

Back Injuries

Herniated or “slipped” discs and related injuries in the neck and back can be extremely painful and limit the victim’s ability to work and go about their activities of daily living.

While disc injuries can be medically verified with CT and MRI scans, the adjuster might argue that your injuries are a pre-existing condition that they won’t cover. Most adults will have some degree of spinal degeneration as they age.

Regardless, you deserve fair back injury compensation for your current injuries and medical treatment, even if they are an exacerbation of a prior condition.

Severe or Catastrophic Injuries

The highest personal injury compensation is paid to car accident victims who suffer the worst types of injuries, or the estate of a wrongful death claim.

Severe vehicle accidents involving high speeds, head-on collisions, large trucks, or multi-vehicle crashes often result in devastating harm to drivers and passengers.

Severely injured victims typically have multiple types of injuries, which may include brain trauma, spinal cord damage, visible scarring, internal injuries, amputations, and numerous crushed or broken bones.

Never try to handle a severe personal injury claim without a lawyer. These cases are complex and there’s too much to lose. You need an experienced attorney to protect your interests.

Charles R. Gueli, Esq. is a personal injury attorney with over 20 years of legal experience. He’s admitted to the NY State Bar, and been named a Super Lawyer for the NY Metro area, an exclusive honor awarded to the top five percent of attorneys. Charles has worked extensively in the areas of auto accidents,... Read More >>