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How Much To Ask For In A Personal Injury Settlement

Last updated: April 9, 2023

A demand letter is an important part of the settlement process of all personal injury cases. This letter includes a statement of the amount of money the injured party is willing to accept to release the other side from liability. But how do you arrive at this number? 

To learn how much to ask for in a personal injury settlement, check out how to calculate the settlement amount and the various costs you might incur when pursuing a personal injury lawsuit. 

Coming Up With A Settlement Amount

To estimate the final compensation for personal injury claims, you must understand how the personal injury damages formula works. Also, include the bills you incurred for your medical treatment and lost wages. Choose a higher or lower range of the formula depending on several key factors, such as:

  • Types and severity of injuries
  • Issues of negligence (are the insurance companies completely liable for the damage?)
  • Presence of witnesses
  • Credible proof and evidence (e.g., medical records)
  • Sentiment of the jury if a claim proceeds to a court trial
  • Competent legal representation from a personal injury attorney

Calculating The Personal Injury Settlement: Factors To Consider

Calculating The Personal Injury Settlement

A reasonable personal injury settlement provides full compensation. This means that you should be entitled to a settlement amount that covers all the damages resulting from the accident. This includes the following:

Medical Expenses

The insurance company of the negligent party usually covers all your current and future medical bills, including the cost of therapy, prescriptions, and other healthcare needs you might require for your recovery.  

Lost Income

A personal injury settlement should also cover your missed wages due to your temporary absence from work. In some states, like Texas and California, if you are unable to work due to an injury or disability, you may be able to receive workers' compensation. This can help you cover lost wages and medical expenses. 

Lost Future Earning Capability

Any lost earning capacity due to any disabilities that the accident left you with should also be included in the final amount of your compensation payment.

Pain And Suffering

In most instances, settlement negotiations also include the compensation you are entitled to receive for the physical pain and suffering you experience due to the injury.

Mental And Emotional Trauma

A proper settlement demand should consider any mental or emotional anguish you suffered and will feel due to the accident.  

Lost Experiences And Opportunities

Aside from disfigurement, compensation for non-economic damages also includes lost experiences and opportunities. This typically covers settlement for loss of consortium and loss of enjoyment of life.  

Property Damages

In a car accident, compensation is available for damage to your vehicle, regardless of whether you were the driver or not. Other personal items are also covered as property damage.

Insurance Policy Limit

Insurance adjusters are only expected to offer a sum within the extent of their insurance policies. Be aware of this information when estimating an appropriate settlement value.

How To Calculate The Personal Injury Settlement Claim

How To Calculate The Personal Injury Settlement Claim

For calculating a suitable settlement amount, there are two basic formulas:

1. Multiplier formula

2. Daily formula (per diem)

However, three different factors can reduce the amount of money you receive for your personal injuries, namely:

  • Shared fault rules
  • Damage caps
  • Insurance availability

Personal injury attorneys can assist you in determining what the average settlement amount might be in your state. Their legal team can also provide the necessary legal advice and representation to maximize the amount you can demand in a personal injury settlement.

Multiplier Method

The multiplier method is common for insurance companies and personal injury lawyers to estimate how much a jury would award you in a personal injury trial. The formula is economic damages + non-economic damages (economic damages x multiplier).

Your economic damages are those that can be easily quantified in terms of monetary value. This includes the following:

  • Medical expenses
  • Lost income
  • Lost earning capabilities
  • Property damage

To estimate the value of your non-economic damages, your economic damages are multiplied by a number within the range of 1 and 5. Non-economic damages include:

  • Physical pain and suffering
  • Disfigurement or scarring
  • Mental anguish and emotional distress
  • Loss of consortium and enjoyment of life

The multiplier number is determined by the severity of your injuries and the extent to which the accident affected your life.

Daily Method 

The daily (per diem) method estimates your non-economic damages paid out over time rather than as a lump sum settlement. In this situation, you receive a certain amount of money for each day you experience pain and suffering. That amount is then added to your economic damages from the accident to yield a final compensation amount.

Your daily earnings are often used to compute the set rate for your pain and suffering.

Shared Fault Reduction

If you were partially at fault for the accident, your compensation could be reduced. This method is commonly used by an insurer for car accidents. The amount that will be deducted depends on your state's shared fault rules. Most states, however, use comparative negligence to assign a percentage of responsibility for shared fault circumstances.

Damage Cap Limitation

If there is a damage cap in place, it will restrict the amount of compensation you are entitled to. If you request a higher amount than the damage cap allows, the insurance company will likely deny your claim.

Lack Of Insurance Coverage

If you're in an accident and your insurance policy covers the damages, there will usually be a policy limit, which is the maximum amount the insurer will pay out. If the damages exceed that limit, you'll need to find another source of compensation, which may mean filing a claim against the at-fault party. Such limitations should be taken into consideration when demanding a settlement. 

How Are Personal Injury Settlements Paid Out

The majority of settlements are paid in the form of a lump-sum payment or a structured settlement.

A lump-sum settlement is a single payment of the entire agreed-upon compensatory amount. Lump-sum injury settlements are enticing because they eliminate the need to haggle with the insurance company in the future to seek reimbursement. On the other hand, structured settlements allow you to get your compensation in monthly installments. This arrangement is preferred by most victims, as they could cover future expenses and receive a larger lump-sum payment later in the payout. 

Additional Costs Of Pursuing A Personal Injury Case

When considering whether or not to pursue a personal injury claim, the cost is a major factor. In reality, many people opt not to pursue a claim because of the cost. A case in the state of New York can usually cost between $15,000 and $100,000 or more.

Court fees, expert witness costs, consultation fees, administrative fees, deposition costs, and investigation costs are the most common and expensive charges in a personal injury lawsuit.

How A Personal Injury Lawyer Can Help

How A Personal Injury Lawyer Can Help

An experienced personal injury attorney from a reputed law firm may assist accident victims in a variety of ways at every stage of a personal injury case. They can:

  • Calculate your losses accurately
  • Conduct a case review
  • Evaluate an initial settlement that is fair and adequate
  • Draft an impactful demand letter
  • Negotiate with the insurance adjuster
  • Prepare the necessary documentation for the trial
  • Pursue a settlement decision in your favor

Frequently Asked Questions

Besides the question of "how much to ask for in a personal injury settlement," here are other frequent questions asked by those who wish to pursue a personal injury claim.

What's the max amount you can ask for in a personal injury settlement?

It is typically advisable to begin your negotiation at a rate 75–100% higher than your bottom line to have room to haggle. For example, if you are content to receive $1,500 to $2,000 for your claim, make your first demand of $3,000 to $4,000. If you believe your claim is worth $4,000 to $5,000, make it worth $8,000 to $10,000.

What are the average personal injury settlement amounts?

According to the U.S. Department of Justice, plaintiffs were successful in around half of their personal injury cases. They also reported findings on the compensation a plaintiff would usually receive after winning their case.

-50% of all claimants were only awarded $24,000 or less
-The average amount of money given is $31,000

Who decides whether to accept a settlement offer?

It is ultimately your decision whether or not to accept a settlement offer. However, before settling an amount, you should consult a personal injury attorney.

How do I know if I have a good settlement offer?

A reasonable settlement offer should be able to cover not just your medical expenses and legal fees but also all non-economic and punitive losses you have suffered.

If you are currently pursuing a workers' compensation claim, discover the benefits of hiring a workers' compensation lawyer in this Disability Help article. 

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Cheri Hermanson
Cheri leads our team of writers in producing the best quality content there is regarding society and disability, most especially those that helps ease the quality of life for our differently-abled loved ones.
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