When you’ve been injured in an accident, the path to financial recovery can seem shrouded in mystery. You know you have medical bills and lost wages, but how do those numbers translate into a settlement offer? How is a value placed on your pain and suffering? While there is no rigid, universally applied formula, both attorneys and insurance companies use established methodologies to begin the complex process of calculating a case’s value.
Understanding this process can demystify settlement negotiations and highlight why having a skilled attorney is not just helpful, but essential. Here’s a look at how the value of a personal injury case is calculated, step by step.
Step 1: Building the Foundation by Tallying Special (Economic) Damages
The calculation always begins with the most concrete numbers: your economic damages, also known as “special damages.” This is the bedrock of your claim, representing every verifiable dollar you have lost due to the accident. The first and most critical task for your attorney is to create a meticulous and exhaustive list of these costs. This isn’t a rough estimate; it’s a detailed accounting supported by a mountain of evidence.
- Gathering the Documentation: This phase involves collecting every relevant piece of paper, including:
- All medical bills: from the ambulance ride and emergency room to surgeries, follow-up appointments, and physical therapy sessions.
- Receipts for prescriptions and medical devices.
- Pay stubs, employment letters, and tax returns to prove lost income.
- Repair estimates or replacement quotes for damaged property.
- Receipts for any other out-of-pocket costs, like transportation to medical appointments.
- Projecting Future Costs with Expert Help: This is where a simple calculation becomes a sophisticated projection. If your injury is severe and will require long-term care, we cannot simply accept the bills you have today. We must calculate the costs you will incur for the rest of your life. This requires professional expertise:
- Medical Experts: Your treating physicians or other medical specialists can provide testimony about the future treatments you will likely need, such as additional surgeries, ongoing physical therapy, or lifelong medication.
- Life Care Planners: These are specialists who create a detailed report outlining every medical and non-medical need an individual with a permanent injury will have over their lifetime.
- Economists: An economist takes the data from medical and vocational experts and projects those costs into the future, accounting for inflation and other economic factors to arrive at a single, present-day value.
Step 2: Quantifying the Intangible by Valuing General (Non-Economic) Damages
This is the most challenging and subjective part of the calculation. How do you put a number on pain, anxiety, or the inability to play with your children? While no amount of money can erase suffering, the legal system attempts to provide compensation through non-economic, or “general,” damages. Attorneys and insurance adjusters often use two common methods as a starting point for negotiation.
- The Multiplier Method: This is the most frequently used approach. The process involves taking the total sum of your calculated economic damages and multiplying it by a number, typically between 1.5 and 5. This number—the “multiplier”—is determined by the severity and circumstances of your case.
- A low multiplier (1.5 – 2) might be used for a case with minor injuries, a short recovery time, and minimal long-term impact (e.g., a soft-tissue injury that resolves completely).
- A high multiplier (4 – 5 or even higher) would be reserved for cases involving catastrophic, permanent injuries, significant disfigurement, extreme pain, and a profound impact on the victim’s quality of life (e.g., paralysis, traumatic brain injury, or severe burns).
The final multiplier is a point of intense negotiation and is influenced by factors like the egregiousness of the defendant’s conduct and the persuasiveness of the evidence proving your suffering.
- The “Per Diem” Method: Less common but sometimes used, this method assigns a certain dollar amount for every day you suffer from your injuries. This daily rate is often based on your daily earnings, under the argument that living with pain is at least as difficult as going to work each day. You would be compensated at this rate from the day of the accident until the day you reach “maximum medical improvement.” While simple in concept, this method is often less effective for injuries with long-term or permanent effects.
It is crucial to understand that these methods are not legal formulas. They are negotiation tools and starting points. A skilled attorney uses these as a baseline but builds the true value of your non-economic damages through powerful storytelling, compelling evidence, and testimony from you, your family, and your doctors about how the injury has truly devastated your life.
Step 3: Adjusting for Reality – The Influence of Liability and Policy Limits
Once a preliminary value is established, it must be adjusted based on the practical realities of the case.
- Comparative Negligence: In Hawaii, if you are found to be partially responsible for the accident, your final award is reduced by your percentage of fault. For example, if your damages are calculated to be $100,000, but a jury determines you were 20% at fault, your maximum recovery is reduced to $80,000. If you are found to be more than 50% at fault, you recover nothing. Therefore, the strength of the evidence proving the other party’s total liability is a massive factor in the final calculation.
- Insurance Policy Limits: This is a hard-and-fast ceiling. You can have a case worth millions of dollars, but if the at-fault party only has a $100,000 insurance policy and no significant personal assets, collecting more than that $100,000 becomes extremely difficult. An essential part of our job is to investigate all available insurance policies, including your own Underinsured Motorist (UIM) coverage, to maximize the potential sources of recovery.
Calculating the value of your case is a complex art and science. It requires meticulous documentation, expert testimony, and strategic negotiation.
Let us help you understand the true, full value of your claim. Call the Law Office of David Eugene Smith today for a free and thorough case evaluation.