Motor-vehicle-related accidents are a common occurrence on the roads. According to figures from the National Safety Council (NSC), motor-vehicle incidents led to 5.4 million medically consulted injuries in 2021, with total motor-vehicle injury costs estimated at $498.3 billion.
Many of these costs such as medical expenses, wage losses, and motor-vehicle property damage are incurred by one or more of the parties involved in an accident. To recover their losses and receive compensation for the injuries or harm they suffered, many people seek legal redress by pursuing a personal injury claim.
In this article, we will look at some of the factors insurance companies and courts consider when determining the amount of compensation a claimant may receive in a car accident personal injury claim.
Table of Contents
The Multiplier Method
An insurance company will often use the multiplier method when calculating the amount of compensation a claimant is entitled to in a car accident settlement. This method will first determine the claimant’s total economic damages which include matters such as lost wages, medical expenses, rehabilitation costs and other financially quantifiable losses.
This figure will then be multiplied by a specific number known as a multiplier. For example, if a claimant’s total economic damages amount to $6,000 and the multiplier assigned is 3, their total compensation will be $18,000.
The multiplier will be based on factors such as the extent of the claimant’s injuries, the anticipated recovery time, and the amount of pain and suffering they will endure as a result of the accident. Typically, the greater these non-economic losses amount to, the higher the multiplier is likely to be.
As there is no hard and fast rule to determine economic damages or the multiplier, it will often come down to negotiation between the two parties. The more evidence a claimant has to support the nature and severity of their injuries, the impact their injuries will have on their quality of life, and other factors relevant to their case the more likely they are to arrive at a higher multiplier, and fairer amount of compensation.
The Per Diem Method
Under this method, the claimant is compensated on a daily rate, which is based on the number of days they have been in pain and suffering. For example, if the daily rate assigned by an insurance company is $150 and the number of days is 60, the claimant will be eligible to receive $9,000 in damages. When calculating the daily or ‘per diem’ rate, the following factors are typically taken into account:
- The severity of injuries: The more severe the claimant’s injuries are and the more likely they are to impact their quality of life, the higher the daily rate will be.
- Recovery period: The longer it is anticipated to take the claimant to recover from their injuries, the higher the daily rate is likely to be.
- Precedents: By reviewing past court decisions that have comparable or similar facts, a claimant and their legal team can establish a benchmark on which to base their daily rate.
As the method for determining compensation can vary according to jurisdiction, it is best to consult a qualified personal injury attorney who can advise you further.
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