How Are Car Accident Compensations Calculated?

Insurance companies have a variety of formulas that they use to calculate the value of a claim, and you can use these same methods to make a rough estimate of your claim’s worth. Remember though, that car accidents can be complicated, with costs stemming from vehicle repairs, medical bills, as well as pain and suffering. 

If you’re wondering how to calculate the amount you are owed after a car accident, we’ve outlined a few of the strategies you can use below. Talking to an attorney will of course be the simplest way to get a clear and accurate idea of the payment you should receive, and the attorneys at Thistle Law are available to offer you a free consultation to give you a better idea of the value of your specific claim. 

What Kind of Information Do You Need to Estimate Your Car Accident Settlement?

The first thing you will want to do to estimate your compensation is to gather information related to the accident. This will be broken up into three basic categories: information about your vehicle, information about your medical expenses, and pain and suffering damages. 

  • Vehicle information: You’ll want information not only about the damage and cost of repairs to your vehicle, but also the initial value of your vehicle, condition at the time of the accident, and mileage. 
  • Medical information: You will want to wait until your injuries have completely healed before tabulating medical costs, and calculate the lifelong costs associated with a permanent injury. Insurance companies will also consider your age and lifestyle when calculating how your injuries have affected your life. A young construction worker who is left in a wheelchair may get a higher payout than a retired grandfather who has similar injuries because the construction workers‘ earning capacity has been greatly diminished.
  • Pain and suffering: This is the most complicated part of a claim to determine. Pain and suffering is unique to the individual and their life circumstances. Let’s look at our construction worker and retired grandfather again. Although the retiree isn’t losing out on any wages from work, if he has several young grandchildren that he normally watches during the day, his ability to care for them may be greatly diminished. This means he may claim more in pain and suffering damages. 

Insurance companies will look at this information and use a formula to evaluate the value of your claim. The two most common formulas are the multiplier method and the per diem method. 

How to Use the Multiplier Method to Calculate Your Car Accident Compensation

The multiplier method looks at quantifiable damages, like hospital bills or rehabilitation costs, and uses a multiplier to estimate the cost of pain and suffering associated with those injuries. Typically the number used is somewhere between one and five, with three being the average. So to use an example, let’s say your medical bills, lost wages, and vehicle repairs altogether equaled $10,000. Multiply that number by three, and the total amount is $30,000. Numbers higher than five can be used for very severe accidents, with one and two used for minor accidents. 

How to Use the Per Diem Method to Calculate Your Car Accident Compensation

The other method that insurance companies use is called the per diem method. A monetary amount will be allocated to you for every day that you are suffering or recovering from your accident. This method is not used as commonly as the multiplier method, but in some straightforward cases involving lost wages or other lost income, it can be useful. 

How Accurate Are Car Accident Compensation Calculations?

As you can probably see from the information above, calculating a car insurance settlement amount is not a precise science. Factors about your life, employment, and habits can all play as important a role as your medical and vehicle repair bills. You can use the information above as a general guide, but for a more precise estimate, your best choice would be to speak to a skilled attorney.

The lawyers at Thistle Law understand how to calculate the maximum value of your claim using their 80 years of experience in personal injury law. Contact us today for a free consultation, and let us help you take the guesswork out of calculating your claim. You can call us at 215-525-6824 or fill out our online form


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