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Car Accident Compensation
Guide to Understanding Car Accident Compensation
Victims are often aware that they can recover car accident compensation. But few understand the types of compensation available or how to get the most compensation from a car accident. We created this guide to provide a brief overview of the types of car accident compensation that may be available to you.
More than 6 million car crashes occur in the U.S. each year. Some 3 million people are injured in these accidents, with 2 million sustaining permanent injuries. For those injured, the costs of past, present, and future medical expenses can be overwhelming. Moreover, car accident victims often incur other damages as well as experience emotional and mental trauma.
Types of Car Accident Compensation
There are many different types of car accident compensation available to victims. The types of car accident compensation available to victims depends on many factors. Local laws, determining who was at fault for the accident, and the extent of the victim’s damages all play a role. But as a general matter, there are three main categories of car accident compensation:
- Economic damages
- Non-economic damages
- Punitive damages
Economic damages will make up a large portion of your car accident compensation. Economic damages are those losses that are easy to document and prove. Some examples of common types of economic damages include:
- Medical costs: Includes ambulance and emergency services, surgery, rehabilitation, surgery, nursing services, and prescriptions.
- Rehabilitation expenses: Physical therapy, assistance devices such as wheelchairs and crutches, canes, and artificial limbs. Car accident compensation will also cover assistance technology for people who suffer catastrophic injuries that damage their sensory functions, such as hearing or speech.
- Future medical costs. Medical experts must put a value on the remaining costs that are required for a complete recovery. This could include the costs of future surgeries, follow-up visits, and physical therapy. In other severe cases, accident injuries are so bad that the likelihood of a complete recovery is slim. Some car accident victims may have lifelong chronic pain, while others could have partial or full paralysis. In these cases, experts put a value on extended medical treatment or long-term care that must be included as future medical expenses.
- Lost earnings: Depending on the type of injuries, accident victims may be unable to work for weeks or months. These losses can add up quickly and impose an enormous financial burden on victims and their families.
- Lost earning capacity: This the long term lost income due to catastrophic injury or permanent disability. Lost employment benefits also fall within this category.
When you file your car accident claim, you can also request compensation for your non-economic losses. This is the biggest reason to get help from a personal injury attorney. Putting a value on non-economic losses can be challenging, but a good auto accident attorney will have a team of experts. Medical experts and life care planners can help to put a dollar amount on your non-economic losses.
Common types of non-economic compensation are:
- Pain and suffering: This includes physical pain and mental and emotional trauma from your injury. Victims experience physical pain from their injuries that continue as they recover and perhaps longer. A temporary or permanent disability can make you feel depressed, anxious, or embarrassed. For the court to award money for pain and suffering, some states require that the victim have an injury that medical professionals think is permanent.
- Scarring and disfigurement: This is a form of pain and suffering that is often addressed differently under state laws. Car accident victims who have deep burns, severe lacerations, or amputations can get compensation for scarring and disfigurement. These injuries usually require a long recovery period that can last for months. Multiple surgeries may be required, as well as extensive rehabilitation. Getting compensation for scarring or disfigurement usually requires a permanent loss of a limb, or scars that lead to emotional pain, humiliation, anger, etc.
- Loss of consortium: This is the effect the car accident has on your relationship with your spouse or partner. In some states, loss of consortium only applies to people who are married. In many severe car accidents, injuries cause a loss of intimacy, both physical and emotional, which can affect the union on many levels.
Another type of car accident compensation that may be awarded is punitive damages. You are entitled to seek punitive damages for car accident compensation in limited circumstances. The court awards punitive damages to punish the wrongdoer and deter others from similar conduct.
Not all states allow car accident victims to collect punitive damages. But as a general rule, the defendant must have been guilty of gross negligence or intentional misconduct:
- Intentional misconduct: The defendant chose to take action to cause injury or damage when he knew the accident would cause harm.
- Gross negligence: Careless conduct that was so reckless it amounted to a complete disregard for the life, safety, or rights of people exposed to it.
How Fault Impacts Car Accident Compensation
Two factors that can impact car accident compensation are fault and the negligence laws of the jurisdiction where the accident occurred. In at-fault states, drivers that are responsible for an accident must pay for the damages that they cause. In these states, owners and drivers are typically required by law to buy liability coverage. With liability coverage, the at-fault driver’s insurance company will pay for car accident victims’ damages.
About a dozen states are no-fault states. In no-fault states, drivers must buy personal injury protection (PIP) coverage. PIP will reimburse drivers and their passengers regardless of who was at fault for the accident. A party that suffers an injury must file an insurance claim with his or her own insurance company.
Victims in no-fault states are generally limited to seeking reimbursement through PIP. But some exceptions allow victims to “step outside” and file a lawsuit against the at-fault party’s insurance company. For example, if the victim’s damages exceed PIP coverage limits.
In both at-fault states and in no-fault states where the victim steps outside of PIP it is necessary to determine fault. In these instances, the state’s negligence laws come into play. How these laws treat fault can impact the victim’s car accident compensation and even whether the victim can recover at all. While every state has its own negligence laws, they all fall into three general categories:
- Pure Comparative Negligence
- Modified Comparative Negligence
- Contributory Negligence
Pure Comparative Negligence
In a pure comparative negligence state, the victim can recover damages from the at-fault party. But her recovery will be reduced based on her level of fault for the accident.
For example, suppose you get into a car accident. You incur $50,000 in damages and file a lawsuit against the other driver and his insurance company.
At trial, you prove that the other driver was negligent. But the jury also determines that you were 20% at fault for the accident. In a pure comparative negligence state, you will recover 80% of your total damages (80% x $50,000 = $40,000).
Modified Comparative Negligence
Modified comparative negligence states are similar to pure comparative negligence states with one important exception. In a modified comparative negligence state, if the victim’s fault exceeds a threshold (usually 50% or 51%) then she cannot recover any compensation for the car accident. Returning to our example, suppose that the jury determines that you were 60% at fault for the accident. Since you are more at fault than the other driver, you will not receive any car accident compensation.
Contributory negligence laws often produce the harshest results of the three for car accident victims. The only jurisdictions that follow contributory negligence are Alabama, Maryland, North Carolina, Virginia, and Washington, D.C.
In these states, a car accident victim cannot recover if she played any role in causing the accident. Returning to the example one more time, suppose the jury found that you were just 1% at fault for the accident. Even though the other driver was 99% at fault, you will not receive any car accident compensation in these states.
State negligence laws are complex. An experienced personal injury lawyer can ensure that your rights are protected.
Is There Auto Insurance to Cover Your Claim?
In most at-fault states, drivers must buy liability insurance coverage. And in no-fault states, drivers carry PIP coverage. It is important to determine whether there is sufficient coverage in place to cover your losses.
If so, it will be easier for you to recover. It can be difficult to claim compensation for your injuries if the other driver doesn’t have any, or adequate, coverage.
For this reason, many drivers buy uninsured underinsured motorist coverage (UM). UM insurance will cover your losses if the other driver does not have adequate insurance, or if you are the victim of a hit-and-run.
Information Needed to Make a Car Accident Compensation Estimate
It can be difficult for non-lawyers to make a car accident compensation estimate. Victims of auto accidents are often unaware of the full scope of compensation that is available to them.
Even if they are aware, it is often not easy to calculate certain types of damages. For example, the costs of future medical treatment or reduced earning capacity are speculative and often require an expert to substantiate.
That being said, victims can come up with a rough car accident settlement estimate. This involves adding up your medical bills, lost wages, and property damages. To calculate the damage to your vehicle, determine the vehicle’s value at the time of the accident. Get an estimate to get it fixed, and determine whether the vehicle can be repaired for less than book value. If the vehicle cannot be fixed, car accident compensation will include the costs of replacing the vehicle.
Once you have added up these costs, you can get a car accident compensation estimate for non-economic damages using one of the formulas discussed above.
How Insurance Companies Determine Car Accident Compensation
Insurance companies determine car accident compensation by evaluating the damages that the injured party incurred. These can include:
- Medical bills.
- The costs of future medical care.
- Lost wages.
- Reduced earning capacity.
- Property damages.
- Pain and suffering.
Calculating the victim’s medical costs, lost wages, and property damages are straightforward. The insurance adjuster reviews relevant documentation and adds up the victim’s expenses. But calculating future medical costs, reduced earning capacity, and non-economic damages such as pain and suffering are more complex.
An experienced lawyer can help you calculate a car accident compensation estimate that includes the full extent of your losses. Calculating pain and suffering in a car accident involves using one of several formulas.
Car Accident Compensation Formulas for Pain and Suffering
There are several methods that insurance adjusters or juries use to calculate car accident compensation for pain and suffering. The two most common formulas are the pier diem method and the multiplier method.
Per Diem Method
The per diem method involves assigning a monetary amount to each day that the victim experiences pain and suffering following a car accident. One figure that is often used is the victim’s daily earnings.
For example, suppose that you injure your back in a car accident. You experience pain and require physical therapy. You are unable to work for three months or approximately 90 days. You earn $60,000 per year at your job.
Working an average of 250 days per year amounts to $240 per day ($60,000 divided by 250). To use the per diem method to determine the pain and suffering portion of your car accident compensation award, you multiply $240 by 90. This equals $21,600.
One downside of the per diem method is that it can be hard to justify. The insurance company will often argue that the figure is unreasonable. Moreover, the per diem method is not ideal for permanent or long-term injuries.
The multiplier method involves multiplying your economic damages by a fixed number. This number often ranges between 1.5 and 5 but depends on the facts of your case, with more serious injuries justifying a larger multiplier. Returning to our example from above, suppose that your medical bills total $50,000. The insurance company uses a multiplier of 1.5 to arrive at pain and suffering car accident compensation of $75,000 ($50,000 x 1.5).
Are You Still Entitled to Car Accident Compensation?
Every state sets a deadline for filing personal injury claims. This is known as the statute of limitations. The statute of limitations is different in every state.
For example, the statute of limitations in Kentucky is just one year, while in New Jersey it is 6 years. The deadline starts running from the date of the accident. If the victim fails to file a lawsuit by the deadline, he or she will likely forfeit the right to recover. There are a few exceptions to the statute of limitations, but they are rarely granted.
The statute of limitations does not apply to the insurance claims process. This means that you can still reach a settlement with the insurance company after the deadline set by the statute of limitations. But the insurance company will have little incentive to settle since the victim will lack recourse through the court system.
Missing the deadline set by the statute of limitations can have disastrous consequences. An experienced personal injury lawyer can ensure that your rights are protected and help you to recover the car accident compensation that you deserve.
Car Accident Settlement Calculator
Coming up with an exact car accident compensation estimate can be challenging. But it is possible to come up with a rough estimate. This can be done manually as we discussed above.
You can also use our free car accident settlement calculator or contact an experienced car accident lawyer to see what your case may be worth. Most offer a free consultation to assess your claim and damages.
What’s my car accident settlement worth?
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