Personal injuries cover a continuum from minor bruises and scrapes to paralysis, brain damage, and other life-changing traumatic injuries. Accident attorneys in Orange County and insurance adjusters take many factors into account when calculating the value of a personal injury claim.

Unfortunately, injury claims cannot be valued by plugging numbers into a one-size-fits-all formula. Personal injury lawyers use their experience, their familiarity with local jury verdicts, and their ability to evaluate intangible factors when they arrive at a settlement value. Before adjusting the final result to take account of those factors, however, lawyers and insurance adjusters use the same process to evaluate claims.

How to Calculate Your Personal Injury Damages

Legal Settlements are based on a prediction of the damages that a jury would award if a case went to trial. Juries are asked to award both economic and non-economic damages.

Economic damages are easier to calculate. They are the out-of-pocket expenses that the injury victim incurs, or expects to incur, as a result of the accident. Typical economic damages include past and future medical expenses, the cost of purchasing prescription medications, and the expense of attending physical therapy sessions recommended by a doctor. Juries also award past and future wage loss attributable to the accident as economic damages.

The economic damages related to traumatic or permanent injuries are usually more difficult to calculate. If the injury victim can no longer pursue former employment, it may be necessary to consult a vocational expert to evaluate the victim’s present and future earning ability. An economist might also be required to compute the wage loss the victim will experience over a lifetime due to reduced earning capacity. Any expenses that must be incurred to cope with an injury, such as home healthcare or the cost of a wheelchair-accessible van, must also be considered.

Non-economic damages include pain and suffering, emotional distress, loss of sexual relations, and other harms that cannot be measured with mathematical precision. Personal injury attorneys and insurance adjusters sometimes use a "multiplier" to place a value on non-economic damages. A multiplier is a number, typically between 2 and 5, by which economic damages are multiplied to arrive at the value of non-economic damages.

After economic and non-economic damages are calculated and added together, the total must be adjusted to account for the victim's contributory negligence, if any. In California, the victim’s damages are reduced in proportion to the victim’s share of responsibility for the accident. If the victim was 25% at fault, the victim's damages are reduced by 25%.

The next step takes account of the likelihood of winning or losing a trial. If the victim has an 80% chance of winning, the total value calculated above is reduced by 20% to account for the risk that the victim will lose the trial and receive nothing at all.

Finally, the value that results from the previous calculations is reduced to reflect the money that will be saved by settling before trial. The cost of expert witness testimony, preparation of trial exhibits, deposition transcripts, and other trial expenses will reduce the victim’s net recovery if the case ends with a favorable verdict. Deducting those expenses from the settlement value approximates the net amount that the accident victim will actually recover if damages are awarded by a jury. 

The Reliability of Compensation Calculation Formulas

Any number of online articles will suggest that personal injury victims can settle their own cases by following a formula that uses a multiplier. What they don't tell you is that experienced personal injury lawyers know that multipliers are only appropriate in cases where injuries are not severe or long-lasting. Even in those cases, a multiplier is only one factor among many that attorneys and insurance adjusters consider when they settle cases.

Attorneys keep track of jury verdicts. They know when a jury is likely to be generous and when it is likely to be miserly. Juries base decisions in part on whether they like the parties. A sympathetic victim will get a better verdict than one who comes across as grouchy or arrogant. Juries will punish a surly defendant but might give a break to one who seems friendly and contrite.

No formula can take account of those intangible factors. And no multiplier can account for a nagging injury that might cause a lifetime of misery without producing substantial medical bills.

Experience is more important than a formula when personal injury cases are evaluated for settlement. While a formula might provide a starting point, calculating a settlement value is more an art than a science. Experienced personal injury lawyers know when a case is worth significantly more than a formula might suggest.

How Policy Limits Affect Victim Compensation Amounts

Unfortunately, a formula has little value if the accident is caused by a driver who does not have adequate insurance coverage. A formula might suggest that a case should settle for $25,000, but if the driver who was at fault only has $15,000 in bodily injury coverage, a formula will not help the victim recover adequate compensation.

California's requirement that drivers carry a minimum of $15,000 in bodily injury coverage results in many injury victims recovering less than full compensation. That's why it's important for California drivers to purchase adequate uninsured and under-insured motorist coverage when they buy their insurance policies. A victim who has adequate coverage can receive full injury compensation even if the driver who caused the accident is under-insured.

In some cases, a personal injury lawyer can find other sources of insurance that will help victims receive adequate compensation. Rather than automatically settling for the policy limits, accident victims should get advice from a personal injury attorney to determine if claims against other possible insurance sources are worth pursuing.