Personal Injury Payout Guide for Beginners: What’s Your Injury Claim Worth?

You’re entitled to fair personal injury compensation from the at-fault party or their insurance company. See how to calculate how much your claim is worth.

Determining the exact amount of money that fairly represents your losses can be tricky. There’s no special formula to calculate the perfect amount for every type of injury scenario.

Every personal injury claim is different. Your settlement depends on the unique circumstances leading to your injury.

It’s important to know about valuing your medical costs, lost wages, and emotional distress. Here’s where we unpack what you need to know about hard costs, pain and suffering, and factors the insurance company will try to use against you.

Calculating a Personal Injury Settlement

No matter how you were injured, you will have some kind of compensatory damages, meaning personal and financial losses.

There are two types of damages:

  1. Special damages, also called hard costs or economic damages, are the measurable amounts of money you lost and will continue to lose due to the at-fault party’s negligence. “Specials” include things like medical bills and lost wages.
  2. General damages, also called non-economic damages, are the intangible losses you’ve endured and will continue to endure in the future. General damages are commonly called “pain and suffering.”

Start by Adding Up Your Special Damages

You will calculate special damages by adding together all the hard costs resulting from your injury.

Special damages include the actual dollar amounts of:

  • Past and future lost wages
  • Medical bills, including therapy and nursing care
  • Out-of-pocket expenses, such as medications, crutches, and transportation fees for medical appointments
  • Replacement costs, such as childcare, housekeeping, and yard work while you were incapacitated
  • Personal property damage or lost items

The total of your special damages is the foundation of your personal injury settlement. Be sure to include the full amount of every medical bill, even if your healthcare plan covered some or all the cost at the time you were treated.

Injury settlement value is directly related to the severity of the injury. Without medical bills to prove those injuries, you won’t get far with a claim.

Some types of medical services will involve more than one bill, for example:

  • Imaging tests like X-Rays, MRIs, and CT Scans usually have a bill from the facility for use of the machine and a separate bill from the doctor who interpreted the test results
  • Emergency departments send a bill from the hospital and a separate bill from the emergency room physician who treated you

Account for Your Pain and Suffering

General damages are more difficult to assess because there is no objective measurement for your suffering. Each personal injury case is different.

Your pain and suffering can never be the same as another’s. Two people can sustain exactly the same injury, but one person may experience greater pain than the other. One may develop depression while the other does not. The same type of injury may prevent one person from working while it does not affect someone else.

Types of general damages may include:

Multiply the total of your special damages by one or two to get a fair estimate of the value of your pain and suffering. For mild to moderate injury claims, most insurance companies will accept a low multiple of your costs to account for your non-economic damages.

Your demand for fair compensation is the total amount you believe is reasonable for your injury claim, sent with copies of your medical bills and other supporting evidence.

Example: Neck Injury Compensation from Rear-End Collision

Victoria was stopped at a red light in morning traffic. She heard the squeal of brakes just as a violent impact to the rear of her car jolted her forward into her safety belt, then slammed her back against the seat.

Adam was headed to work but decided to get a jump on the day by calling his secretary to dictate a letter. Adam was so focused on his dictation, he didn’t realize traffic in front of him had stopped until it was too late. Despite slamming on his brakes, Adam’s SUV plowed into the back of Victoria’s sedan.

Adam was ticketed for failing to keep a proper lookout and following too closely. Victoria was treated at the scene for shock and a potential neck injury before she was transported by ambulance to the hospital.

Virginia suffered whiplash injuries to her neck and shoulders, with a mild concussion. Because her data entry job required her to type at a computer all day long, she was out of work for three weeks until the neck pain, stiffness, and headaches subsided. She fully recovered from the car accident within a month.

Because she was fully recovered from her injuries, and liability was clear, Victoria decided to handle her own injury claim. She added up her hard costs, then added 1.5 times the total of her hard costs to estimate her pain and suffering compensation.

Medical bills (ER, Doctors, Scans and X-rays, PT):  $3,000

Lost wages ($720 per week for 3 weeks): $2,160

Replacement services (lawn care, meal delivery): $300

Total Economic losses ($3,000 + $2,160 + $300): $5,460

Non-economic losses ($5,460 x 1.5): $8,190

Estimated injury settlement ($5,460 + $8,190): $13,650

Victoria made a settlement demand to Adam’s auto insurance company for $14,000.

After a few rounds of offers and counteroffers with the insurance adjuster, Victoria settled her injury claim for $12,000

Assigning a value for any type of general damage is entirely personal. Only you can assess the depth of your pain and suffering. The challenge is to convince the insurance company to pay.

How Adjusters Look at Claim Value

Rarely will the insurance adjuster agree to pay your initial demand for compensation. The adjuster will carefully review your demand to see how you arrived at those figures and if the evidence matches your claim. Here’s what they will be looking for:

Shared Blame

The adjuster will try to shift some of the blame on you for the circumstances of your injuries. In a few states, that’s a reason to deny your claim.

Most states use modified comparative fault laws, so your claim can be denied if you are equally or more to blame than the insured. If not outright denied, your compensation can be reduced according to your percentage of blame.

If you don’t agree with the adjuster’s allocation of fault, talk to an attorney before proceeding with negotiations.

Reasonable Costs

Insurance companies only pay for reasonable and necessary medical expenses. If an “injury doctor” pumps up the billing with excessive tests and questionable medical treatments, the adjuster can take those costs out of the calculation.

For general damages like pain and suffering, the adjuster will compare the amount you’re demanding to what they think is appropriate.

The adjuster’s assessment of your pain and suffering will always be different from yours. Convincing the adjuster your calculations are realistic and fully supported by the evidence is the nitty-gritty of settlement negotiations.

A Note on Settlement Calculators

Despite objections by trial lawyers, some insurance companies try to save money by using computerized settlement calculators. Insurance settlement programs assign values to special damages and other factors in a personal injury claim. There are hundreds of factors, like whether the victim is represented by an attorney and average settlement amounts for similar injuries in the geographical area.

A personal injury calculator can’t measure the depth of your pain and suffering. It can’t calculate the negative effects injuries have on your life. Software programs can only generalize compensation amounts based on statistics, which will never be able to measure true human suffering.

Factors That Affect Injury Payouts

Most personal injury claims result from auto accidents and slip and falls. Injuries can also result from dog attacks and other negligent acts. For most of us, that means dealing with an insurance company to pursue compensation.

In general, cases with verified facts and strong evidence settle for higher amounts of compensation.

Factors that impact your final insurance payout:

  • Policy limits: When your injury claim value is much higher than the available insurance limits, your only recourse is to file a lawsuit against the at-fault person for the difference.
  • Location: The adjuster will pay more to settle a claim out-of-court in venues where juries tend to favor injury victims over insurance companies.
  • Subrogation: This is the right for an insurance company to pursue reimbursement for money they paid out on your behalf. If an insurance company, Medicare, Medicaid, or the VA pursues a subrogation claim, you may not receive the total payout you were expecting.
  • Permanent injuries: Amputations, disfigurement, paralysis, and other permanent injuries demand higher payouts.
  • Punitive damages: This is an amount awarded by a court to penalize the at-fault party for egregious behavior. Punitive damages can sometimes be far higher than the injury compensation itself.

The adjuster may say that your claim deserves a lower payout if you have a prior injury, even when the old injury was completely healed or only slightly related to your current injury. Don’t fall for it. You deserve compensation for any exacerbation of a previous injury.

Likewise, if you were fragile or prone to injury due to a pre-existing condition, the eggshell skull rule protects your right to compensation.

Example: College Athlete’s Prospects Ruined by Drunk Driver

Peter was attending state college on a football scholarship, with hopes of going pro after graduation. Home on break, Peter was driving home from his summer job when his vehicle was broadsided by a speeding car.

Mario had been tossing back beers ever since he got off work. He was feeling buzzed, but didn’t think twice about jumping into his car to go visit his girlfriend. He didn’t even notice the stop sign when he plowed through the intersection, hitting Peter’s car on the driver’s side of the passenger compartment.

Mario was rushed to the hospital with head and arm injuries. He was later arrested at the hospital for drunk driving and cited for several moving violations.

Peter was airlifted to a trauma center. The left side of his body took the brunt of the crash, leaving Peter with fractures to his arm, hip, and leg, in addition to a ruptured spleen and a moderate brain injury. He underwent several orthopedic surgeries during his two-month hospital stay, then was transferred to a rehab facility for another three months.

Peter was unable to return to college the following academic year, and his football playing days were over.

Peter’s family hired an experienced personal injury lawyer to handle his case.

Medical bills (past and future):  $75,000

Lost wages ($300 per week for 6 weeks): $1,800

Projected Loss of Earnings($860,000¹ x 10): $8,600,000

Total Economic losses ($75,000 + $1,800 + $8,600,000): $8,676,800

Non-economic losses: (emotional distress, pain and suffering): $20,000,000

Demand: ($8,676,800 + $20,000,000): $28,676,800

Rather than risk a lawsuit when their insured was clearly negligent, Mario’s insurer tendered their policy limits of $500,000. Peter’s lawyer filed underinsured motorist claims with Peter’s parents’ auto insurance company to pursue another $500,000.  Mario had no personal assets worth pursuing.

In this case, although the claim value could arguably reach many millions of dollars, there were not enough available funds or assets to cover the injured party’s current and future losses. Under the circumstances, Peter’s attorney will negotiate a reduction of the medical liens against the settlement, so Peter will end up with more of the $1 million total recovery.  

Personal Injury Settlement Taxes

Whether you received a settlement or court award, you may owe taxes on part of your injury settlement money.

The Internal Revenue Service (IRS) will have access to your settlement information. In many cases, the insurance company will submit a 1099 tax form to the IRS to report the amount of compensation paid to settle your personal injury claim.

Federal tax law 26 USC 104 governs compensation for injuries or sickness. Pay close attention to how your injury payout is broken down into different categories. You may owe taxes on a portion of your settlement.

How is a personal injury settlement affected by bankruptcy?

There are federal and local laws that may exempt part of your personal injury case from bankruptcy, depending on your unique situation. These rules may spare some of your property or assets from being used to satisfy your debts.

Your personal injury award or settlement counts as an “asset” in your Chapter 7 bankruptcy case when the injury occurred before you filed bankruptcy. It doesn’t matter if you wait to file an injury claim or lawsuit until after the bankruptcy.

Compensation for physical injuries that happen after your Chapter 7 filing is usually yours to keep.

Chapter 13 cases are a different story. Potential compensation for injuries that occurred before or during your Chapter 13 plan becomes part of the bankruptcy estate.

Attorneys Can Increase Injury Compensation

Uncomplicated claims for minor injuries can usually be handled directly with the insurance company. Claims adjusters are paid to reach settlements. The last thing an adjuster wants is for you to hire an attorney and file a personal injury lawsuit against their insured.

For cases like medical malpractice, birth injuries, product liability, wrongful death, and other catastrophic injuries, you’ll need an experienced personal injury attorney.

High-dollar severe injury cases often turn into lawsuits that hinge on expert testimony. Only specialized law firms have the legal experience and financial stability to build a strong case against corporate entities. They can afford to advance the high cost of conducting extensive discovery.

If you’re unable to work due to your injuries, you may run out of money for basic expenses like housing and food. An attorney can help you apply for a personal injury settlement loan, which is more akin to a cash advance than a loan. The terms of these loans usually aren’t great, so be careful. An attorney can help you navigate this process.

When a claim turns into a trial, and a jury calculates your injury compensation, there’s always a chance the verdict will be much more than the original settlement demand.

On the other hand, you can never tell what a jury will decide. That’s why a good personal injury attorney often negotiates a fair settlement with the insurance company before the case ends up in court.

Insurance companies are notorious for offering lower injury settlements to claimants who aren’t represented by an attorney. They know when they make their “final settlement offer” you probably won’t have the energy or legal skill to fight for more money.

Get personalized legal advice before accepting an unfair offer. Most reputable injury attorneys offer a free consultation to injured persons. There’s no cost to finding out what a good attorney can do for you.

Personal Injury Payout Questions

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 >>