Understanding Auto Insurance: Calculating General Damages Claims

If you've been in a car accident, you may be wondering how to calculate the general damages you can claim as part of your auto insurance. General damages are a type of compensatory damage, which means they are meant to repay the plaintiff for losses suffered. They are awarded in cases where it is difficult to calculate a dollar value for the amount claimed. This includes pain, suffering, and other physical losses. In the case of a car accident, the plaintiff may claim general damages for pain and suffering, as well as any loss of enjoyment of life, emotional distress, and mental health problems resulting from the accident.

Unlike special damages, which have precise dollar amounts associated with them and are typically calculated by adding up invoices and receipts, general damages are much harder to quantify. There is no specific method or formula for determining the amount of general damages owed, and they are based on a variety of factors, including the nature and severity of the injury, the amount of pain experienced, the length of recovery, and the disruption to the plaintiff's life.

To get a reasonable starting point for negotiating general damages, insurance companies and attorneys often use the multiplier method or the per diem (daily rate) method. The multiplier method involves multiplying the amount of special damages (medical bills, property damage, and lost income) by a factor of 1.5 to 5, depending on the severity of the injuries. The per diem method involves demanding a certain dollar amount for each day the plaintiff has to live with the pain caused by the accident, usually calculated based on the plaintiff's daily earnings.

General damages multiplier

When it comes to auto insurance claims, there are two types of damages: special damages and general damages. Special damages are financial losses related to the accident, including medical treatment costs, property repair or replacement costs, and lost wages. These are relatively easy to calculate.

On the other hand, general damages are non-monetary losses, such as emotional distress and lowered quality of life, which are more challenging to quantify. This is where the "general damages multiplier" or the "multiplier method" comes into play.

The multiplier method is a commonly used equation to estimate general damages in auto accident cases. Here's how it works:

• The insurance adjuster totals up the claimant's medical bills stemming from the accident (medical special damages).
• They multiply this number by a certain factor (the multiplier), which typically ranges from 1.5 to 5. The multiplier reflects the severity of the claimant's general damages, such as pain and suffering.
• The estimated general damages are then added to the medical special damages and any lost wages to arrive at an overall estimate of the claim.

For example, let's say someone was in a car accident and their medical bills totalled $10,000. If they experienced severe injuries and long-lasting disability, their multiplier might be close to 5. So, their total estimated damages, including pain and suffering, would be $10,000 (special damages) x 5 (multiplier) = $50,000.

It's important to note that the multiplier method is just a starting point for negotiations, and there is no guarantee that the insurance company will offer the exact amount calculated. The final settlement amount may vary depending on various factors and negotiations between the claimant and the insurance company.

Medical expenses

Medical payments coverage, or MedPay, is a type of insurance that helps cover medical expenses for injuries sustained by the policyholder and their passengers in a car accident, regardless of who is at fault. This type of coverage also extends to the policyholder and their family members if they are injured as pedestrians or while riding a bicycle. MedPay is not required in most states, but it can provide additional protection and peace of mind.

When calculating medical expenses for auto insurance claims, it is important to keep track of all medical bills and related expenses. This includes costs for initial treatment, ongoing care, and any future medical expenses that may be incurred as a result of the injuries. It is also crucial to keep records of other out-of-pocket expenses, such as transportation costs to and from medical appointments, as these may also be reimbursable.

In addition to medical special damages, there are two other types of damages that may be considered when calculating general damages: special damages and general damages. Special damages include easily calculable losses such as property damage and lost wages, while general damages refer to non-monetary losses like pain, suffering, and emotional distress.

When negotiating a personal injury settlement, insurance adjusters and lawyers often use the multiplier method or the "per diem" (daily rate) method to calculate pain and suffering. The multiplier method involves taking the total amount of special damages and multiplying it by a factor between 1.5 and 5, depending on the severity of the injuries. The "per diem" method involves demanding a certain dollar amount for each day the injured party has to live with the pain caused by the accident, which can be calculated based on daily earnings.

Property damage

When it comes to property damage in the context of car accidents, this refers to any harm that occurs to physical items as a result of the collision. This includes damage to your vehicle, as well as harm to personal items inside the car. Property damage can also refer to damage to immovable objects like buildings and land.

The process of calculating damages for property damage claims is intricate, and there is no specific formula. It requires a careful assessment of the loss to return the injured party to their financial position before the accident. This involves determining the depreciation in value of the damaged property, or the cost of replacement or repair.

• Cost of repairs: The cost to repair your vehicle and return it to its original condition, or as close as possible. If the cost of repairs exceeds the value of the vehicle, it may be deemed a total loss.
• Fair market value: If the vehicle is a total loss, you can claim the fair market value of the car before the harm occurred. Fair market value is defined as the highest price a buyer would pay, assuming no pressure to buy or sell and that both parties are fully informed about the car's condition and quality.
• Rental car costs: You can claim damages for the loss of use of your vehicle during the duration of the repair or until it is replaced. This is often measured as the cost of a rental car, or a per diem charge if you did not obtain a rental car.
• Diminished value: A damaged car is worth less than its original value. You can claim damages for the market loss or diminished value of your vehicle as a result of the accident.
• Replacement value of upgrades: You can claim the replacement value of upgrades made to your car, such as a stereo system or special wheel rims.
• Lost or damaged personal property: This includes personal items inside the car that were lost or damaged in the accident, such as jewellery, sunglasses, prescription eyeglasses, or even time-sensitive items like groceries.

It is important to note that insurance companies play a significant role in the process of calculating property damage, especially when a vehicle is deemed a total loss. Additionally, the laws and requirements may vary by state, so it is recommended to consult with a knowledgeable attorney or insurance company to ensure that you receive proper compensation for any property damage incurred in a car accident.

Lost earnings

If you are a W-2 employee with a salary, the lost earnings calculation is relatively straightforward. You must present documentation from your employer stating what your lost wages were, as well as evidence such as pay stubs, medical records, and a letter from your employer. The calculation is as follows:

• Take the amount of your hourly wage and multiply it by the number of hours missed due to the accident. For example, if your hourly wage is $20 and you missed work for three days (8 hours per day), your calculation would be: $20 x (8 hours x 3 days) = $480 in total lost wages.
• If you are paid an annual salary, take your yearly salary and divide it by 2080 (the number of weekday work hours in a year), then multiply it by the number of hours missed due to your injuries. For example, if your yearly salary is $40,000 and you missed 3 days of work, your calculation would be: ($40,000 / 2080) x (8 hours x 3 days) = $461.54 in total lost wages.

If you are self-employed, the calculation of lost earnings becomes more complex. Self-employment income can be harder to document, especially for certain types of small business owners. Additionally, self-employment income usually varies from month to month and year to year, and may be seasonal. In this case, you can use financial documentation such as profit and loss statements, account records, prior tax returns, invoices, and bills to support your lost income claim.

It is important to note that you can also claim future lost earnings if your ability to earn in the future is affected by the injuries sustained in the auto accident. This may require the expertise of a forensic economist or other expert witness to calculate these potential losses.

Future losses

Future medical expenses are calculated based on the course of treatment prescribed by a doctor. Expert witnesses may be called upon to support a claim for future medical expenses. The cost of future medical care can be determined through the use of expert witnesses and other evidence.

Future lost wages are another component of future losses. These can be calculated based on your regular hourly or weekly pay rate multiplied by the time missed from work. If an injury will prevent you from being promoted or requires you to move to a lower-paying job, you may also be compensated for lost future earnings.

In addition to future medical expenses and lost wages, future losses can also include the cost of future household assistance necessitated by an injury. For example, if an injury results in a disability that requires ongoing assistance with daily tasks, the cost of this assistance would be included in future losses.

Frequently asked questions