The sooner you develop reasonable expectations about your claim’s value, the sooner you will be in a position to settle your claim for a fair value. Most of the frustration in the personal injury settlement negotiation process comes from speculating on a claim’s value. This module will walk you through how to analyze your injuries, your medical expenses, and other factors to come up with a range of values for your claim. It is informative to note that some legal science experts have identified more than 100 different variables that affect jury verdicts. Fortunately, pre-suit settlements do not tend to be that complicated.
Your claim’s worth is called damages. Damages include many different aspects of what you have gone through. You are entitled to damages (payment) for:
- Past, present, and future medical bills
- Past, present, and future lost wages
- Pain and suffering
- Loss of familial companionship
- Emotional damages
You need to understand and be able to argue each of these to obtain the best possible personal injury settlement. Then, you will be able to assign your claim a range of its probable worth for purposes of making your Demand and negotiating a settlement.
Just as important as understanding all the components of your personal injury claim is you having the right expectations of your claim’s worth. If your opinion of your claim’s value is inflated, you will never be satisfied. Most people find and join ClaimClinic because they are trying to find out what their claim is worth. If your expectations are unrealistic, your claim will not settle and you will hire a lawyer, who will take at least a third of your claim. In most small personal injury claims, this results in you getting LESS in your pocket then you would have received by taking the insurance company’s fair offer and not hiring an attorney.
The above damage types are broken down into two sets or categories. There are Special Damages and General Damages.
You as a Witness
In addition to all the “data” you are going to send the insurance company, YOU act as a factor in your claim’s value. What kind of witness you will make on your own behalf is a big consideration for insurance adjusters. When they are working with you, they are constantly sizing you up. Are you organized and accurate or do you tend to exaggerate and overstate things? Do you have a criminal record or some other skeleton they can trot out at trial, such as a history of making claims? Do you get easily aggravated and fly off the handle or do you remain calm and professional when arguing your case?
The At Fault Driver as a Witness
How the other driver presents will effect your case’s value as much as the way you present. That is why it pays to investigate the at-fault driver. You will want to make sure you include any favorable information in your Demand regarding the other driver.
Using a Formula
Everyone’s tendency is to take the hard numbers, the special damages of medical bills and lost wages, and come up with some sort of formula to figure out the value of their claim. In fact, if you read some other site’s materials you will find out that everyone advocates using a formula and simply multiplying your specials by some magic number. What you see most often is people saying to multiply your medical expenses by a number between 3 and 5. This is a huge myth that will leave you sadly disappointed in your average, minor car accident case. This rule-of-thumb used to be used (like as in a decade ago) for very minor accidents where people were just shaken up. If you look at current settlement data, the multiple currently being used is more like 1.5 and varies so much that you should not just rely on a formula.
There are at least two reasons why insurance companies don’t use such a simple formula to offer you money on your claim:
First, the 3x myth would encourage “build up” – the process where claimants run up medical expenses to create a bigger claim value.
Secondly, not all medical expenses are the same. Money spent on physical therapy is not the same as massage therapy. For your average car accident claim, the going multiple is more like 1.3 to 2 times your specials. If you become fixated or stuck on getting 2-3 times your medical expenses to settle your claim, you will be very frustrated. The insurance company software programs are much more sophisticated then this rule of thumb. They input up to 100’s of data points on your case and then use an algorithm to provide the adjusters with a range of settlement values. This may have worked back when adjusters were handling valuations and not software, but it does not hold true today.
All that being said, we will show you the theory behind the formula method.
If you do end up using some sort of formula to assign a value to your claim, lost wages should not be included in the base number that you multiply. The formula method uses medical expenses as a base multiple for figuring out pain and suffering, so it is not appropriate to add your lost wages to the base number. Instead, you will multiply your medical expenses by a multiple and then tack on your lost wages at the end.
For example, suppose you had $4,324 in medical expenses and $836 in lost wages. You decide to use a 1.5 multiple to figure out what your claim is worth. The math would like this:
$4,324 x 1.5 = $6,486
$6,468 + $836 = $7,322 (total claim value)
To get to a higher multiple value of your claim, your claim will need to have some or all of the following characteristics:
- Serious injuries, meaning more than just soft tissue. Usually this means broken bones, herniated discs, muscle tear, joint displacements, or large open wounds.
- Injuries are unquestionable, meaning the insurance company cannot find a previous or subsequent injury to blame instead of the accident. Your injuries and pain must all appear in your medical records and not just be you claiming them in a Demand letter.
- Prolonged recovery lasting more than the normal 4-6 weeks that most injuries self resolve
- Permanency, such as some sort of permanent scarring or permanent injury or loss of full range of motion around the injury site. You will need to have a doctor note the permanency in your chart or have the permanency be so obvious that an adjuster has no choice but to accept your argument.
Even if the insurance company denies your claim, they may put some nuisance money on your case just to avoid the time and expense of you filing a lawsuit. If you find yourself in this predicament, you may be able to get a little something in terms of money, but don’t expect to get an offer that would exceed your medical bills.