How Personal Injury Settlements Are Calculated
Calculating a fair settlement involves totaling quantifiable financial losses (Economic Damages) and applying a multiplier to account for intangible losses (Non-Economic Damages).
The "Multiplier Method" Explained
Insurance companies often multiply your medical bills by a factor (usually 1.5 to 5) to estimate pain and suffering. Severe injuries with permanent impacts warrant higher multipliers, while minor tissue injuries typically use the lower end of the scale.
Key Factors That Affect Your Final Payout
- Comparative Negligence: If you are partially at fault, your settlement is reduced by your percentage of liability.
- Insurance Policy Limits: Recovery is often capped by the defendant's insurance coverage unless you have underinsured motorist protection.
- Maximum Medical Improvement (MMI): Settlements should ideally occur only after you reach MMI to ensure all future medical needs are accounted for.