A personal injury lawsuit is a legal dispute that comes about when someone suffers harm from an accident or an injury, and someone else could be responsible for the harm. The insurance company of the person responsible pays money to the injured individual to cover medical expenses and bills, pain and suffering, and any other relevant medical costs.
A formal personal injury case usually starts when someone files a civil complaint against another person.
Most disputes over fault for injuries and accidents are resolved through an informal settlement, without actually going to court. Settlement usually occurs after negotiation, and then when the settlement terms are agreed on, there’s a written agreement signed by both sides. In this written agreement, both sides are saying there won’t be any further action, and the matter is being resolved through the payment of an amount of money that’s agreeable to each party.
So how exactly is the value of a settlement or case determined? The following are five things to know about the value of a personal injury case.
1. Understanding Damages
To understand how personal injury cases are valued, you have to understand the legal concept of damages. Damages are the injuries and losses a plaintiff sustains that form the basis of calculating how much money should be awarded as compensation.
You can’t find the appropriate value for a personal injury case without knowing the damages that are available.
There are three basic categories of damages. There are economic, non-economic, and punitive.
In almost all personal injury cases, economic and non-economic damages are part of the situation. Punitive damages are only available in very specific situations, and they aren’t usually part of calculating a settlement.
Economic damages can be measured. They’re financial losses that can be directly attributed to the injury someone suffers and the underlying accident. Economic damages can be pretty easy to calculate.
Non-economic damages are pain and suffering damages designed for the compensation of the emotional or psychological impact of your injuries.
2. Insurance Company’s Damages Formula
When an insurance company is calculating damages, they will add up the total medical expenses the plaintiff incurred because of the injury. These are known as special medical damages.
These are the base figure an adjuster will use to determine how much to pay someone who’s injured for their pain, suffering, and non-monetary losses.
When the injuries are minor, an adjuster might multiply the amount of so-called special damages by 1.5 or 2. When the injuries are severe, an adjuster might use a multiple of up to 5, or in extreme cases, 10.
Then, the adjuster will add lost income stemming from the injury.
3. Compensatory Damages
Compensatory damages are relatively easy to calculate compared to pain and suffering. Compensatory damages that are common in personal injury cases include:
- Medical treatment—personal injury awards are almost always going to include the cost of medical care from the accident. This is reimbursement for treatment you already received and also compensation for the estimated medical expenses you’ll need in the future because of your accident.
- Income—you might be entitled to compensation if your accident impacted your wages and salary. This will include not only income you’ve already lost if you’re the injured party but also future earnings that you would have made if it weren’t for the accident and your injuries. In legal terminology, the damage award for future earnings is classified as a loss of earning capacity.
- Property loss—if your vehicle or any other items were damaged because of the accident, you may be entitled to reimbursement for repairs or for the fair market value of whatever property you lost.
- Pain and suffering—this is compensation for the discomfort you dealt with due to the accident.
- Emotional distress—this is usually reserved for more serious accidents, and it’s a way to compensate a plaintiff for the mental impact of an accident, like anxiety and loss of sleep.
- Loss of enjoyment—if you’re in an accident that keeps you from enjoying day-to-day activities like working out or hobbies, you could receive damages for loss of enjoyment.
- Loss of consortium—in this situation, the damages related to the impact of the injuries on the relationship with your spouse. For example, you might not be able to maintain a sexual relationship because of injuries.
4. The Impact of Plaintiff’s Actions
If you’re the plaintiff in a personal injury case, your actions or inaction can impact your damages award.
Comparative negligence refers to a situation where if you’re at fault, even partially, for the accident leading to your injuries, your damage award may reflect that. Most states follow a comparative negligence standard, which links damages to the degree of fault for the injured person.
Another term to be aware of is contributory negligence. There are only a handful of states that follow the contributory negligence concept. You might not be able to recover any compensation in these states if you’re partially to blame for the accident.
Something else on the plaintiff’s part that can affect the calculation of damages is whether they took reasonable steps to reduce the impact of the accident. For example, if the plaintiff didn’t seek the necessary medical treatment after an accident and it makes their injuries worse, their award for damages may be reduced.
5. What About Punitive Damages?
In calculating damages, there’s another term—punitive damages. This doesn’t apply to many personal injury cases. Punitive damages aren’t the same as compensatory damages.
Rather than being a way to compensate a plaintiff for their losses, the goal of punitive damages is to punish the defendant, with the hope of deterring similar behavior in the future.
Since punitive damages are a means of punishment and deterrence, they’re only available if a plaintiff can demonstrate with clear and convincing evidence that a defendant acted maliciously or recklessly.
Since punitive damages are extremely rare, you don’t usually see them included in damage calculations.