Understanding What Insurance Companies Pay for in a Personal Injury Claim

Physical TherapyDetermining the value of a personal injury claim is critical for both you and insurance companies. This amount varies based on the facts of your situation and the applicable law. With our experience representing accident victims, we make these determinations all the time. The following is generally how these determinations are made.

Issues to consider

Normally, a party liable for an accident — and the party’s insurance company if there’s a policy covering the situation — pays an injured person for:

  • Medical care and expenses
  • Income lost due to the accident, because of lost work time caused by the injury or getting treated for it
  • Permanent physical disability or disfigurement
  • Loss of family, social and educational experiences, including missed school or training, vacation or recreation, or a special event
  • Emotional damages due to stress, depression or strains on family relationships caused by the accident and resulting physical injuries
  • Damaged or destroyed property

The Insurance Company’s Damages Formula

The insurance company adds up the total medical expenses related to the injury (referred to as “medical special damages” or simply “specials”). That is the base figure the insurance company uses to calculate how much to pay for pain, suffering and other nonmonetary losses (called “general” damages).

  • If injuries are relatively minor, the adjuster multiplies the amount of special damages by 1.5 or two.
  • When injuries are particularly painful, serious or long lasting, the special damages may be multiplied by a factor up to five (possibly a factor as high as 10 in extreme cases).
  • The adjuster adds on lost income due to the injuries.

This figure is not a final amount. It’s only the number from which negotiations begin.

Percentage of Fault

The most important factor affecting how much the insurance company is likely to pay is the extent to which each party is at fault. The damages formula provides a range of how much your injuries might be worth, but only after the issue of fault is considered can you get a good grasp of the actual compensation value of your claim.

This is not an exact science, but both you and the insurance company, objectively looking at the facts with unbiased eyes, should have a good idea of the degree of fault for both sides. The more at fault you were, the less the value of the claim, and vice versa for the insured.

New Jersey is considered a modified comparative negligence state. This is also known as the 51 percent rule. You may be eligible for compensation if you are less than 51 percent responsible for your injuries. If an agreement can’t be reached about who is at fault and to what extent, a civil court will examine the accident and come to that decision.

Once the damages are calculated and the degree of fault factored in, you have the financial value of your case.

If you or a loved one has been injured in an accident and want to discuss your legal options, contact our office for a free consultation.