How Insurance Companies Calculate Damages for Personal Injury Claims

By Neil Kalra


There are two primary types of damages when calculating settlements: economic and non-economic. Economic damages are pretty easy to calculate and include the following:

· Current and ongoing medical expenses

· Immediate and long-term lost income

· Property damage

· Disability

· Any other out-of-pocket expenses arising from the accident

Non-economic damages are not as easy to compute and include the following:

· Pain and suffering

· Emotional distress

· Changes in daily life

· Loss of consortium

· Scarring or disfigurement

· Wrongful death


Many insurance companies use a method for determining offer amounts called the “specials” (economic damages) and “generals” (non-economic). The insurer will take all the “fixed” costs (medical bills, damaged property repair/replacement bills, previous lost wages/benefits amounts and add them up.


Once your “specials” are calculated, the insurance company then uses a multiplier to determine your “general” damages. The multiplier can range from 1.5 to 5, or higher. This is linked to the severity of your injuries. The multiplicand (the total amount of your special losses) is the figure that is multiplied by 1.5 - 5).


Here’s a highly simplified example. If you have $10,000 in “specials,” which suggests a less serious case, the insurance adjuster may use a multiplier of 1.5 or 2 to get an amount of $15,000 to $20,000 in “generals.” The adjuster would then add your “specials and generals” to come up with a settlement offer: somewhere between $25,000 and $30,000 for this claim. If wrongful death is involved, the multiplier can be 10 or more, depending on other variables. But it doesn’t necessarily mean that the exampled $30,000 will be the insurance company’s offer. Then let’s say, your attorney calculates these damages using a “5,” and the insurance company uses a “2.” That’s a pretty large difference between your value and the insurer’s (in this case, 60 percent). If that happens, a quick settlement is probably not in the cards. This is why injured victims (and their attorneys) need to seriously consider:

· How much pain the victim has experienced

· For how long

· How their injuries impacted their life between the accident and the time of their demand

· And how much pain they will have in the future.


In almost every injury case, injured plaintiffs are usually able to recover some amount, sometimes small – other times very large – for pain and suffering; depending on the severity of the injury and the impact it has on the accident victim’s future. The victim’s ability to prove the degree and length of their pain and suffering plays a large role in the amount of compensation they receive.


However, since all cases are different, and if the defendant was grossly negligent or acted with willful intent, this could weigh in the injured plaintiff’s favor, especially if the insurer doesn’t want to risk the possibility of punitive damages being added to original damage award at trial. But on the other hand, if the injured victim bears a percentage of the responsibility for the accident, they could be penalize and might end up with a noticeably smaller compensation amount.


Calculating damages is not an exact science. But this formula is as close to universal as there is today. Calculating damages accurately is one of several advantages you have in retaining an experienced lawyer to manage your insurance claim.


Whether you or a family member was injured due to a car accident, commercial vehicle accident, or semi-truck accident, you may be entitled to full benefits and compensation. Know your rights and get the answers you deserve. The attorneys at Kalra Law Firm are dedicated to getting car accident victims the compensation they deserve. Call our office now to speak with one of our experienced car accident lawyers to represent you in your case. We offer a free initial consultation and will not charge unless we win your case. Call our New York City and Queens car accident lawyers today if you have any questions about a car accident you were involved in. Call us at (718) 897-2211 www.unionlawyer.com

Tags: Features, Health and Safety, Law and Politics, New York

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