Brian White | August 23, 2020 | Auto Accidents
An automobile accident is a significant life event, especially if you sustain injuries. An accident, and the aftermath, can be physically, emotionally, and financially draining. The recovery from emotional scars can last for some time. Physical healing will depend on the extent of your injuries. You can start your financial recovery by pursuing a settlement offer.
If you have decided to accept a settlement, hopefully, you have done so with the help and guidance of a personal injury attorney. Insurance companies are notorious for lowball offers to get you to settle quickly. An experienced attorney can tell you far more about what your claim is worth and your odds of reaching that amount through settlement negotiations.
Insurance companies use statistics based on previous car accidents to calculate an average for different accident scenarios. Your injuries and your needs moving forward will depend on several different factors. A settlement offer that is fair to you will be a unique number based on your life and the extent of damages you incurred. We will discuss the nine most common considerations in reaching a settlement.
What Do Insurance Companies Use to Determine a Settlement Offer?
Insurance companies rarely, if ever, admit this, but there is a basic formula they often use to determine what a jury might award the plaintiff if the case goes to trial. Adjusters take your total financial losses incurred as a direct result of the accident and multiply it by a factor determined by the area where you live. It is usually a factor of two or three, but juries in some areas are more likely to offer more substantial awards.
The multiplier is also closely tied to your medical bills. Lower medical costs often warrant a smaller multiplier, while more substantial medical costs can result in a multiplier of three or even four. The reasoning is that the more severe the injuries, the more likely the jury is to award a higher amount for ongoing treatment, pain, and suffering.
We discussed the most basic formula for an initial settlement offer, and what that entails. Below we will discuss the nine factors that will play a significant role in determining a settlement offer.
#1 Who Caused the Accident
Establishing fault and modified comparative negligence is crucial before settlement negotiations begin. Texas is a modified comparative negligence state with a fifty-one percent bar. The plaintiff must be found to have caused less than fifty-one percent of the accident to recover damages. If the plaintiff caused fifty-one percent or more of the accident, they are barred from any recovery.
#2 The Type of Insurance and Policy Limits Both Parties Have
Texas requires that motorists maintain minimum liability insurance that follows the 30/60/25 formula. That means the policy must cover up to thirty thousand dollars of insurance for injuries, per person, for a total of sixty-thousand dollars per accident. The insurance must also provide a minimum of twenty-five thousand in coverage for property damage, per accident.
If the injuries the plaintiff suffered exceed the limits of the policy, the plaintiff may have no choice but to file suit on the other driver directly to recover the full damages from the accident.
#3 Current and Future Medical Expenses
As we discussed in the formula above, your medical expenses, both now and in the future, will play a significant role in the amount of settlement offered. A skilled personal injury attorney will do a thorough review of your medical records and talk to medical experts to determine what, if any, your future medical needs might be. It is crucial that you get a settlement that includes any foreseen medical expenses because accepting a settlement offer bars you from any future recourse if your injuries prove more costly than assumed at the time of the settlement.
#4 Lost Wages
Depending on the seriousness of your accident, calculating lost wages can be easy or incredibly complex. If you missed five days worth of work, and have no lasting impairment, it is a straightforward process of determining what you would typically make in five days. If your capacity to earn a living has been reduced permanently, or for some time, calculating your lost earnings can be complicated.
These are questions that your doctor, and other healthcare specialists, in collaboration with your attorney, will answer. The more earnings you lost, the higher the settlement should be.
#5 Property Damage
The damage to your car is one of the easier parts of the calculation. An adjuster will assign a value to how much it should cost to repair the damage to your car. If the damage is beyond repair, the vehicle will be totaled and an amount paid based on the value of the car.
#6 The Impact the Accident has on Your Life
These are non-economic damages that have interfered with your enjoyment of life. Accidents can be traumatic and cause pain and suffering that are both emotional and physical. If you suffered some form of disfigurement from the accident, this might cause you lasting damage in self-esteem.
If you are no longer able to play with your children or enjoy favorite hobbies or past-times, these are all things that deserve consideration in settlement negotiations.
#7 The Insurance Company’s Willingness to Make a Fair Offer
There are times when no matter how hard your attorney has fought, the insurance company refuses to make a settlement offer that is fair in your circumstances. With the help of your attorney, you essentially have two choices when this happens. You cand decide to accept a lower settlement offer, or you can choose to proceed to litigation.
Having an experienced and skilled attorney is crucial at this point. Your attorney will be able to give you an honest assessment of the strength of your case as well as the pros and cons of moving forward with litigation. Litigation can be protracted and take some time to get to trial, but it may be your best option.
#8 Out-Of-Pocket Expenses
The recovery process after an accident can be expenses. The types of expenses you can use in settlement negotiations include the cost of renting a car while yours is being repaired, transportation for medical appointments, prosthetics, and medical equipment such as crutches, slings, and wheelchairs. You can also ask for compensation for any modifications you had to make to your home to accommodate your injury.
It is also possible that you had to hire someone to perform household duties you were no longer able to perform. For instance, if you usually mow your yard, but are unable to due to your injury, you can claim that expense. If you clean your own home, but can not do that during recovery, the costs of a housekeeper can be claimed.
Insurance companies will often make a quick settlement offer, hoping you will accept far less than your claim is worth. You should consult with an attorney before accepting any settlement. If you refuse the first settlement offer, the process can slow down and take some time to reach an agreement. This part may be difficult, especially if you are out of work and seeing the bills pile up day by day. However, working through the process, and refusing to settle for less than your claim is worth, can cause even more economic hardship in the long run.