How Auto Accident Settlements Are Calculated

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Key Points:

  • An accident settlement occurs when the injured party and the insurance company can come to an agreement on compensation.
  • There are three main types of compensation you can be awarded damages for: economic damages, non-economic damages, and punitive damages.
  • Insurance companies have developed formulas to estimate settlements when cases do not yet have a specific dollar amount available.
  • Personal injury attorney fees are often only paid if you are awarded money through a settlement or trial victory.

When negotiating with an insurance company for a settlement agreement, understanding how the case should be calculated can help you identify if the insurance company is negotiating in good faith.

Insurance companies often use accident victims’ inexperience against them during negotiations, making them believe that they are being properly compensated when they actually are not.

So, here are the types of damages you can collect for and how insurance companies come up with settlement offers.

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What Is a Car Accident Settlement?

If a car insurance company sends you a check immediately after the car accident, be careful. Depending on how the check is presented to you and whether you are asked to sign a release or the check is designated as a “full settlement,” you could be settling your claim by accepting and cashing or depositing the check. In most cases, you do not want to reach a settlement until you or your attorney negotiate specific terms and full compensation.

Settlements are usually based on the severity of an accident victim’s injuries, the amount of past and future medical bills, and how much the injury will change your enjoyment of life in the future. Settlements can also be based on the dollar amount that past similar cases have settled for or have reached verdicts.

If the proposed payment from an insurance company is too low for a car accident injury victim, then hiring a lawyer can often result in an increased offer once the attorney works the case up and presents a demand package. If a deal can be made between the injured party and the insurance company or at-fault driver without having to go through a trial all the way to a jury’s verdict, then this is considered a settlement.

Where to Start: Add Up the Damages

Insurance companies are notorious for incorrectly calculating or discounting damages in their favor. Things like medical bills, rehab costs, and other expenses are routinely underestimated or de-valued by insurance companies, so their offers often fall short of what is needed to cover these expenses.

Understanding and documenting your total bills and expected expenses will give you a proper baseline so you know how much compensation you should be entitled to, at a minimum.

There are three main groups of compensation that you can recover money damages for: economic damages, non-economic damages, and punitive damages. Below are descriptions of each type of damage, as well as what they typically include.

Economic Damages

Damages that can be calculated by tallying up expenses and future losses are known as economic damages. Economic damages are often the backbone of any car accident injury claim and settlement. Some of the most common and important economic damages include:

  • Medical bills: These expenses can include costs for the emergency room or hospital care, doctors’ visits, or any testing or surgeries. As time passes after your accident, medical bills typically continue to pile up. Often, a final dollar figure for all medical expenses cannot be fully calculated until months after the accident. Medical expenses can also include the cost of future medical care.
  • Property damage: These damages involve vehicle repair or replacement costs. If a vehicle is a total loss, then insurance companies will look at the car’s fair market value to determine a replacement amount. If any other property is damaged or lost in an accident, then these items can also be included and compensated for.
  • Lost wages: If you were forced to miss work or lost your job because of the accident, then this can be included in your economic damages. Loss of ability to work in the future are another measure of lost wages and may be calculated by your representative or an economist.

Non-Economic Damages

Damages that are intended to compensate someone for the long-term or life-changing effects of an accident are known as non-economic damages. Some of the most common and important non-economic damages include:

  • Pain and suffering: The continual and lingering physical pain that an accident injury victim has to endure.
  • Emotional distress: The ongoing emotional pain and anguish that an accident injury victim has to bear.
  • Loss of consortium: This is included when an accident victim cannot provide love or intimacy with his or her partner due to injuries.

To determine the full amount of non-economic damages, the evidence can include witnesses such as your family, friends and co-workers plus medical reports and functional capacity evaluations.

Punitive Damages

Unlike economic or non-economic damages, punitive damages are not awarded to “pay a victim back” for something they have endured. Punitive damages are an additional amount of money that a court may award against a responsible party as a form of punishment and deterrence.

Punitive damages are typically awarded if a court or Jury feels the conduct of the at-fault party was especially egregious. For example, if a driver was drunk and caused an accident, the driver could be ordered to pay punitive damages.

When Can a Case Settle For More Than the Negligent Driver’s Policy Limit?

It is possible for a case to settle above the at-fault driver’s insurance policy limits. In Georgia, someone injured in a car accident can sometimes recover more than the insurance limit if the insurance company is found to have acted in bad faith.

Bad faith is a complicated subject but in general, in Georgia, bad faith most often happens when an insurance company fails to pay a valid demand to settle a case within policy limits when liability is clear and the case is clearly worth more than the insurance limit.

Consultations Are Free at The Millar Law Firm

If you or a loved one has suffered an injury in a car accident, then make sure you seek the advice of an experienced personal injury lawyer.

We can help. Call The Millar Law Firm today at (770) 400-0000 or contact us online to set up a free consultation with one of our attorneys.

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