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How Car Accident Settlements are Determined

Categorized as Auto Accidents

If you’ve been injured in a car accident due to someone else’s negligence, you may be pursuing a claim against the at-fault driver’s insurance company. After you and your attorney have established liability (who is at fault), the next step is usually to negotiate a settlement.

Very few personal injury cases go to trial, since it is often preferable for both parties to settle out of court. But how are settlement amounts determined? What factors are considered, and what evidence is used? Below is a simple guide to help you understand what goes into calculating the dollar amount of an auto injury settlement.

Damages: Economic vs. Non-Economic

In order to claim compensation, you have to demonstrate damages, or quantifiable losses. Damages can be either compensatory or punitive. Punitive damages are rarely used in car accident lawsuits, and are mostly issued by judges in civil trials. Compensatory damages are meant to pay the injured party for their loss.

When calculating settlement amounts, compensatory damages are typically divided into economic and non-economic damages.

  • Economic Damages
    • Medical Expenses
    • Lost Earnings
    • Future Lost Income
    • Future Medical Expenses
  • Non-Economic Damages
    • Pain and Suffering

Economic damages, or “special” damages, include expenses already incurred, like medical costs and lost earnings. These can be easily proven using bills, receipts or pay stubs. Other economic damages may require estimates involving future projections of loss.

Non-economic damages, also referred to as “general” damages, involve pain and suffering. This is much harder to prove and associate with an actual dollar amount. This can include physical pain and suffering, as well as emotional and mental suffering such as anxiety, sleeplessness and depression.

There is no agreed upon rule for calculating general damages. One method is to multiply economic damages by a number that signifies the degree of suffering. Some auto insurance companies have their own formulas, but they do not reveal how these work. The amounts can vary widely, and ultimately are the result of the settlement negotiation process.

To ensure you get the maximum compensation you are entitled to, you should consult with an experienced Kansas City car accident lawyer. Peterson & Associates, P.C.™ will work to get you justice. Get a free consultation by contacting us today.