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Car Accident Settlement Formula
(3 Types Legally Explained)

Calculating damages from a car accident may seem complicated. However, having a little understanding about the process used to determine damages can help you evaluate your case, and be aware of what settlement you could receive.
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C.L. Mike Schmidt Published by C.L. Mike Schmidt

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What is the "Multiplier Method" for Car Accident Settlement Claims?

While there isn't a universal settlement formula, most insurance companies use a "multiplier" method to estimate the value of an auto accident claim. Since no 2 car accidents are the same, insurers use a kind of calculation in which the adjuster:

  • Adds up the claimant's medical bills resulting from the accident ("medical special damages")
  • Multiplies the above figure by a certain factor (typically between 1 and 5) to get an estimated value of the claimant's less tangible general damages (such as pain and suffering), and
  • Adds the medical special damages, estimated general damages, and any lost earnings and future lost income together to determine the overall estimate of the auto accident claim.

Should You Settle or Sue After a Car Accident?

Whether to settle or sue after an auto accident typically comes down to money, or the balance between what the insurer is offering and what you believe your case is worth. If your car accident lawyer believes your case is worth significantly more than what the insurance company is offering, then it's probably a good idea to file a lawsuit.

How Far Do the 2 Sides Need to be Before Filing a Lawsuit?

To answer this question, it is important to remember to keep in mind that car accident injury claims don't have a specific value; instead, they usually fall within a range. This is because part of the value of a car accident claim is the injured person's pain and suffering, which is hard to quantify with a specific dollar amount.

So, in reality, a claim is not worth, let's say $80,000 exactly. Instead, it's more realistic to say that the case is worth between $60,000 and $100,000. When you think about the value of an auto accident claim as more of a range than a specific number, you get a more accurate picture of what your settlement goals should be. In a case that's worth $60,000 to $100,000, your goal should be to settle the case for somewhere toward the higher end of that range.

Your Lawyer's Opinion is Crucial

Your lawyer's opinion should be very important when it comes to deciding whether or not filing a lawsuit is the right move in your situation. Valuing a case may not seem like rocket science, but, as you can see from above, it isn't as straightforward as you might think.

Your lawyer should have experience with car accident lawsuits and inside information about car accident case outcomes. This is why it is crucial to trust your lawyer's judgment in these matters.

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The Civil Trial Law Specialist Group at Schmidt & Clark, LLP law firm is an experienced team of trial lawyers that focus on the representation of plaintiffs in lawsuits. We are handling individual litigation nationwide and currently accepting new legal challenges in all 50 states.

If you or a loved one was affected, you should contact our law firm immediately for a free case evaluation. You may be entitled to a settlement by filing a suit and we can help.