An injury can lead to a multitude of expenses for a victim. The amount of money an individual needs to cover his or her medical bills, lost wages, pain and suffering, and lost future wages can be difficult to accurately predict, especially if he or she is not done with his or her medical treatment or has not yet determined if he or she will be able to work again. Because a personal injury claim needs a monetary value, attorneys often rely on formulas to come up with value amounts for their clients’ claims. Insurance providers use similar formulas to calculate the settlement amounts they offer to personal injury claimants. Usually, this leads to cases where the claimant receives a settlement that falls somewhere between what his or her attorney determines is appropriate and what the insurance provider initially offers to pay.
Using a Damages Formula
Insurance providers use algorithms known as damages formulas to determine settlement offer amounts for personal injury claims. There are two types of damages that an insurer must determine:
- General damages. These are the losses that a victim experiences that cannot be given a concise monetary value, like mental anguish, chronic pain, disfigurement, and the loss of future quality of life. These are often referred to as simply “pain and suffering.”
- Special damages. Special damages are the damages that come with price tags. Medical bills and lost wages are two examples of special damages that personal injury claimants commonly seek. An easy way to remember the difference between special and general damages is this: if you have an explicit dollar amount for a loss, it is considered to be a special damage. If you will need to estimate a value for a loss, it is a general damage.
Special damages are straightforward – to determine what to compensate a claimant for his or her special damages, all the insurance adjuster does is add up the total amount shown in the receipts provided by the claimant. Calculating a settlement offer to cover both special and general damages starts with this amount, which is then multiplied to cover the claimant’s general damages. The number by which it is multiplied depends on the perceived severity level of the claimant’s injury. Usually, the multiplier ranges from 1.5 to 5. Issues that cause an insurance provider to use a higher multiplier include:
- Whether the injury is permanent;
- The strength of the evidence provided for the claim;
- The length of time the victim will need to recover; and
- The extent of the medical treatment the victim needs.
Fault Plays a Role in your Claim’s Value
A victim’s level of fault in his or her accident can also be factored into his or her claim’s value. In Tennessee, injury claims are judged according to the modified comparative negligence doctrine, which holds that if a victim is found to be 50 percent or more at fault for his or her accident, he or she may not recover damages. For those who are 49 percent or less responsible for their accidents, their settlement amounts may be reduced according to their fault levels.
For example, if you file a personal injury claim and are determined to be 10 percent at fault for your accident, the insurer will deduct 10 percent from the figure it reaches through its formula and offers to you.