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How to calculate damages for an insurance claim after a car accident

Kathryn Hawkins

If you’ve been involved in a car accident, you could quickly find yourself buried under a mountain of unexpected bills. They could be repair bills or hospital bills. Or you even might face a demand for payment from someone else whose car or property was damaged in the crash.

It can seem tempting to try to resolve everything as quickly as possible by filing a claim with your insurance company to reimburse you for the bills you’re now receiving. But in many cases, it’s a bad idea. Here are some tips on how to proceed.

Document your injuries

If you think you may be injured after a car accident, it’s important to follow the proper procedures to ensure your injuries are properly documented.

“After the accident, call the police straight away,” says Kevin Landry, a personal injury attorney in Massachusetts. The police can help determine who’s at fault.

Landry says insurers are less likely to accept a claim at face value if you didn’t seek treatment for the injury immediately. If you don’t notice the pain until later, you still can file a claim, but your insurer may argue the injury isn’t related to the accident.

Even if you don’t immediately realize you’re injured, contact a doctor as soon as you feel pain, and seek diagnosis and treatment. If you want to be reimbursed for the treatment, you’ll need to maintain a good paper trail.

Don’t talk to your insurance company directly

If you’ve been injured in a car accident and plan to seek damages, calling your insurance company directly can hurt your case, Landry says.

Landry says your insurer will ask numerous questions, not just about the injury but also about your background and previous injuries. “Giving the wrong answer gives the company an excuse to limit damages,” he says.

Landry recently worked with a client who suffered a knee injury in an auto accident. Before consulting with Landry, the client called his insurer to report the accident. When asked about previous injuries, the client mentioned he’d hurt that knee while playing basketball in high school, but the injury was 21 years old. Even so, Landry says, “when I went to settle the claim, they told me that his knee problem was a pre-existing injury.”

The difficulties of calculating damages

Working with an attorney will help you calculate monetary damages for the accident, a process that otherwise can be quite complicated. Most personal injury lawyers’ fees will come out of your settlement amount.

“Damages in an auto accident for most states include property damage, medical bills, lost wages and damages for the intangible harm (also known as ‘pain and suffering’) the injured person has experienced,” says Ben Davis, a personal injury attorney in New Mexico.

Although many of these costs can be figured through simple math, “the intangible costs are more difficult to calculate,” Davis says. Insurers generally use software programs to determine payment for pain and suffering in an accident, he says, but “these computer programs often fall short when trying to tackle the intangible, human side to pain.”

A personal injury attorney can help you determine the value of your claim. Someone who’s been injured is entitled to claim damages based on how he was affected by the accident, rather than how an average person might be affected.

For instance, someone with a history of chronic back pain may be severely debilitated by an accident, causing him several months of lost wages, while a healthy person in the same situation may have no lasting effects and would be entitled to less money.

It’s essential to avoid letting your car insurance company take a one-size-fits-all approach to determining your damages, experts say.

Unforeseen complications

Often, people who are injured in car accidents don’t realize the extent of their injuries or the effects it will have on them until months afterward. Before filing a claim, it’s important to work with your attorney to collect documentation of your injuries and evidence of how your life has been affected. It may take months to gather the documentation you need to submit a claim.

How damages should be calculated

Lawyers calculate damages in a number of ways, Davis says.

Often, they’ll multiply someone’s medical bills by two to five times to determine the value of pain and suffering.

Others base the figure on a “per diem” rate, multiplied by the amount of time the person has been suffering. For example, an attorney might calculate 180 days of pain at $50 a day for a total of $9,000.

A third method, Davis says, is based on an hourly calculation to determine how much pain someone has experienced. For instance, $15 an hour for 180 days, at 16 hours each day, equals damages of $43,200.

Insurance companies rarely settle for the amount that a motorist’s attorney demands. When the case goes to court, “we need the jury to be the conscience of the community to determine the value of that pain and suffering,” Davis says.

If you have fully documented your case, you’re likely to settle for a mutually agreeable amount.

“Insurance companies generally don’t give us the amount we ask for, but they almost always give more than they originally offered — and it’s generally fair compensation for the damages the client has suffered,” Landry says.


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