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What is the Average Settlement for a Car Accident?

— August 6, 2021

Whether you are negotiating with an insurance company or preparing to file a lawsuit, having an experienced personal injury lawyer will help ensure that you receive the settlement you deserve.

The aftermath of a car accident could include paying medical bills, negotiating with insurance companies, lost time at work, and the emotional stress of dealing with it all. If you or a loved one suffered severe injuries, then the mental distress and hardships are easily multiplied.

An insurance settlement could reimburse you for your out-of-pocket expenses and lost income. You might also be compensated for your physical and emotional suffering. However, many factors go into the calculation of a car accident settlement. While a reasonable guideline is to take your medical bills and other expense and multiple them by three, every accident case is unique.

For example, if another driver was at fault and you take your case to court, a judge or jury will consider the type and severity of your injuries, the length of medical treatment, your lost income and ability to earn a living, as well as your psychological state. In many situations, it is impossible to determine what would constitute a reasonable settlement if your medical treatment is incomplete.

Factors in Determining a Car Accident Settlement

A car accident settlement should cover a victim’s medical expenses, lost wages, and other expenses. The injured individual should also be compensated for their physical pain and emotional suffering. To maximize a settlement, it is crucial to properly evaluate your damages after an accident.

Medical Expenses

Adding up your medical expenses after an accident might not appear complicated. However, many people take years to fully recover from an accident. Depending on the seriousness of the injuries sustained, some never recover. It is important to understand your prognosis and any future medical treatment you could require. A settlement should be substantially higher if a victim suffered permanent injuries.

Lost Wages

Calculating your lost income also seems straightforward at first. If you missed two months of work, it is not difficult to determine how much income you lost. However, if an injury results in a permanent disability, then your earning capacity could be adversely impacted for years or your entire life. A settlement should reflect how an injury affects your ability to earn a living going forward.

Pain and Suffering

"Wonderful, Gentle" Pain Physician Plotted to Kill with Fentanyl
Photo by Toralf Thomassen on Unsplash

Pain and suffering damages are subjective but could significantly impact your car accident settlement. Every accident victim is unique – no two people will share the same experience. If your injury greatly diminishes your ability to enjoy your life or spend quality time with your children, you deserve to be appropriately compensated. However, because there are no bills available to substantiate your pain and suffering, an insurance provider will often rely on a formula.


Another critical factor in determining a settlement figure is the strength of evidence establishing that another driver was liable for the accident. If there is evidence that you caused or contributed to an accident, your settlement will likely be below average or denied.

Legal Representation

An accident victim could increase the likelihood of maximizing their settlement by retaining an aggressive and Baltimore personal injury attorney. A skillful lawyer will be able to evaluate your damages, including calculating your future medical costs and lost wages. This includes pulling together evidence to support your pain and suffering claims. Furthermore, an attorney will be able to ascertain fault and liability, working to strengthen your negotiating position. 

How Insurance Companies Calculate Pain and Suffering Compensation

Pain and suffering is often a significant portion of a settlement or judgment. Unfortunately, an accident victim is unable to present bills or receipts as evidence to an insurance adjuster or jury. Most insurance providers will employ one of two methods to determine an amount for pain and suffering damages.

Multiplier Method

The multiplier method is the usual way insurers place a value on an accident victim’s pain and suffering damages. For this method, an insurer will use medical bills as its basis.

Once an injured victim’s medical expenses are calculated, an insurance provider will choose a number between 1 and 5 as a multiplier. In most cases, a higher number will be used when the injuries are severe or the anticipated recovery time is long. The total medical costs will be multiplied by the selected number to determine the victim’s pain and suffering damages. For example, if your medical bills total $30,000 and the insurer determines that 3 is the appropriate multiplier based on your injuries and treatment, your pain and suffering compensation will be $90,000.

An insurance adjuster will often argue that the lowest possible multiplier should be used. If you have an aggressive car accident attorney, they will present evidence to support using a higher multiplier.

Per Diem Method

The other method used is the per diem method. Typically, pain and suffering compensation will be based on the time between the date of the injury and the date of recovery. The insurance company will assign a per diem amount. The actual figure will depend on many different factors, such as the severity of the injuries, the length of recovery, and how the injury affects the victim’s daily life and activities. The per diem amount would be substantially higher if the accident victim suffered catastrophic injuries.

To illustrate the per diem method, consider a car accident victim who was hospitalized for 200 days followed by 90 days of physical therapy. An insurer could determine that a $200 per diem amount is fair considering the extent of the injuries. Therefore, a settlement offer would include $58,000 for pain and suffering compensation.

An Experienced Attorney Will Help Maximize Your Car Accident Settlement

Whether you are negotiating with an insurance company or preparing to file a lawsuit, having an experienced personal injury lawyer will help ensure that you receive the settlement you deserve. Insurance companies are focused on limiting their liability and reducing your compensation. While it is difficult to say what an average car accident settlement is, yours will likely be substantially higher with proper legal representation.

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