What Is a Typical Car Accident Settlement Amount?

What Is The Typical Car Accident Settlement Amount?

At least one study of insurance company payouts in the United States shows the average car accident settlement to be $3,231 when there are no personal injuries and the claim is only for property damage. When there is a claim for injuries, the average settlement climbs to almost $15,445.

When it comes to car accident cases, average settlement amounts do not tell the whole story. There are many factors affecting how much a person receives in a settlement. Each accident has its own unique set of factors that makes it impossible to generalize about what you should expect an insurance company to offer to settle your case or what your car accident attorney could be expected to demand to settle the claim. For example, severe injuries that may leave a person with a long-term disability, such as spinal injuries, would result in larger settlement amounts than would a car accident lawsuit where the victim has only minor injuries and quickly recovers with only minimal medical treatment.

The following chart offers a glimpse at average settlement amounts for different types of accidents and different types of injuries:

How Are Car Accident Settlements Determined?

There are three general categories of damages in auto accident cases:

• Special or economic damages: This category of damages is made up of medical expenses, lost wages and other losses suffered by car accident victims that are objectively verifiable. In other words, you can readily establish a monetary value for them with bills, receipts and similar documentation. 
• Non-economic damages or general damages: Pain and suffering, emotional distress, diminished enjoyment of life and other subjective losses that cannot be readily determined by referring to receipts and other forms of documentation.
• Punitive damages: Though not as commonly awarded in personal injury cases as are economic and non-economic damages, punitive damages do not compensate the injured plaintiff for losses caused by the behavior of another party. Instead, their purpose is to punish the defendant for intentional or reckless behavior and deter such behavior from happening again in the future.

Economic damages include the following:

• Medical expenses, including physician’s services, hospital charges and rehabilitation and physical therapy costs.
• Cost of anticipated future medical and surgical care and treatment.
• Prescription medications and specialized equipment, such as wheelchairs and walkers.
• Lost wages.
• Lost or diminished future earning capacity caused by permanent disability as a result of the injuries suffered in the accident. 

Damage to property also must be taken into consideration when evaluating the value of a claim. Depending on the extent of the damage, the cost of repairs or replacement of your car or other property damaged in the accident factors into the amount of a settlement.

Non-economic damages from a car accident include:

• Physical and emotional pain and suffering that you endured.
• Emotional distress, including such conditions as post-traumatic stress disorder, anxiety and depression.
• Loss of companionship and loss of consortium.
• Lost or diminished enjoyment of life as a result of being unable to participate in activities that you enjoyed doing in the past.

Pain and suffering, and other types of non-economic damages, are subjective and more difficult to define in terms of a monetary value than economic or special damages.

Some adjusters at auto insurance companies and personal injury attorneys use a formula to estimate the value of a claim. The first step is to add up the value of all economic damages the plaintiff’s personal injury lawyer can prove with bills, receipts and other documentation. Next, the total of the economic damages is multiplied by a number from 1.5 to 5, which is the multiplier. 

The multiplier for a particular case is chosen based on the severity of the injuries and how those injuries have affected or impacted the life of the victim of a motor vehicle accident. Severe injuries that leave a victim with a permanent disability may warrant a multiplier of four or five, while a car accident with only minor injuries may cause an insurance carrier to assign a significantly lower multiplier in the one to three range.

The total of special damages multiplied by the assigned multiplier results in the estimated value of the car accident settlement that takes into account the economic and non-economic damages sustained by the accident victim. Here is a simple example to illustrate how this method works. 

If you sustained a few bumps, bruises, and superficial lacerations in an auto collision and had $3,000 in economic damages, the law firm handling your personal injury claim may assign a multiplier to it of 2 because you made a complete recovery with only a few days missed from work and no lingering disability or other effects of the injury. Using the multiplier method, the $3,000 multiplied by 2 equals a settlement value of $6,000.

Some insurance carriers use computer software to evaluate a person’s injuries from information contained in medical records, including notations about examination and testing results and treatment. The programs evaluate the data input by an insurance adjuster to provide an estimate of the value of the claim. Keep in mind that regardless of the method used to evaluate a claim, the result is only an estimate of a claim’s settlement value. Its purpose is to give personal injury lawyers and insurance adjusters a point from which to begin negotiations to achieve a settlement agreement. 

What Factors Might Impact the Settlement Amount?

Whatever method is used by your lawyer and the insurance company to determine the value of a car wreck settlement, different factors may affect the final settlement that is eventually agreed upon. Some of those factors include:

• Available liability insurance coverage
• Severity of the injuries
• Limits on damages imposed by state law
• Proof of liability
• Contributory liability of the injured person
• Amount of financial losses
• Legal representation

The amount of insurance carried by the person at fault in causing your car accident injury may be one of the key factors influencing settlement negotiation. All states have laws requiring that motorists either have a policy of auto insurance or produce proof of financial responsibility showing they can pay claims from accidents they cause. However, if a state requires only $25,000 in liability insurance coverage, the insurance carrier will only pay up to the policy limit toward settlement regardless of the actual value of the claim.

State laws also come into play. Some states impose limits on how much compensation may be awarded for non-economic damages or punitive damages in personal injury cases. For instance, Oklahoma imposes a $350,000 cap on the amount that may be awarded for pain and suffering or other non-economic damages in a personal injury case.

When the time comes to decide how much money to offer to settle an insurance claim, adjusters are influenced by the evidence or proof that the attorney for the injured party has to prove liability. They will not pay as much to settle a case where the evidence to prove liability is weak as they will when it clearly establishes that their insured was at fault. 

Another issue regarding fault that influences the amount an insurance company agrees to pay is the existence of fault on the part of the injured party. For example, if the evidence shows that the injured driver of a car was sending a text message while driving and was 40% responsible for causing the accident, the amount a jury could award as compensation would be reduced by 40%. As a result, an insurer would likely reduce the settlement offer knowing what could happen at trial.

An injured person attempting to settle a claim for bodily injury damages without having legal representation from an experienced personal injury attorney is at a disadvantage when up against an experienced insurance adjuster. Adjusters know the law and how to evaluate a claim to determine its value, which gives them an advantage over someone attempting to settle a claim without legal representation.

How Long Will It Take To Receive My Settlement?

It is difficult to predict exactly how long it takes in a particular car accident case to reach a settlement acceptable to all parties and for the injured party to receive payment. Once it receives notice of your claim, the insurance company conducts its own investigation of the accident to gather evidence about what caused it. It will also need proof of the injuries that you claim were caused by the crash.

Factors that may affect when settlement negotiations begin between your attorney and the insurance carrier include:

• Liability issues: If the evidence proving fault of another person is weak or there is evidence that you may share fault in causing the crash, it may delay negotiations or prevent your lawyer and the insurer from reaching a settlement that is acceptable.
• You have not recovered from your injuries: If you are still undergoing treatment for your injuries, it may delay settlement because your lawyer will not settle without knowing what the future holds for you and your injuries.
• Insurance company delaying tactics: Insurance companies are in no hurry to part with their money, so they will not rush to settle unless they think that doing so will result in the injured party taking less than what the case is worth. Your lawyer will push the insurance adjuster to negotiate. One way to do this is by starting the lawsuit, which moves the case along through the court system to put pressure on the insurance company.

An experienced car accident lawyer knows what it takes to get you the settlement money that you deserve as quickly as possible.

Conclusion

Being out of work recovering from injuries received in a car accident can be frustrating particularly when medical expenses add to the monthly living expenses and other bills that you need to pay. Knowing how much your claim may be worth and what your car accident attorney can do to get you the maximum settlement amount as quickly as possible should ease some of that frustration.