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How Are Car Accident Settlements Calculated?

Truck up on a curb with smashed hood and bumper. How are car accident settlements calculated.

How are car accident settlements calculated? Compensation for settlements typically includes economic and non-economic damages resulting from a traffic accident. The value of car accident claims varies depending on the unique circumstances of each case. Factors such as the severity of injuries, legal liability, and other relevant details will determine the amount of compensation you can expect. Assessing the value of a traffic collision claim can be complex, and it usually requires legal expertise.

What Factors Impact Car Accident Settlements in Kentucky?

After a car accident, you may seek financial compensation for damages such as injuries and lost wages. However, several factors determine the settlement amount you can expect to receive.

Liability Determination

In a car accident case, if the liability is clear and the fault is on one driver, the at-fault driver’s insurer will accept responsibility and offer a settlement to avoid a lawsuit. However, if the fault is uncertain or, liability is shared between the drivers, it can impact the compensation amount.

According to Kentucky law, determining liability in an accident follows the pure comparative negligence rule. If both parties in the accident share partial responsibility, fault will be distributed in percentages.

If one driver is mostly at fault, he or she will bear a greater percentage of the fault. If both drivers are equally responsible, they will share the fault equally.

This system allows you to recover damages even if you are found to be partially at fault for the accident. Depending on the percentage of fault, your damage award will be calculated accordingly. Therefore, if you share fault, your settlement will be reduced.

Proving liability is crucial and depends on the evidence you provide. Liability is determined by proving that a driver engaged in a type of negligence. You must provide proof demonstrating that the other driver was responsible for the car accident resulting in your injuries. Therefore, the stronger your evidence, the higher your compensation will likely be. You can seek the help of an attorney to gather evidence and prove liability in a car accident case.

Severity of Injuries

When someone gets injured, the severity of the injury is determined by the amount of physical pain, medical attention required, the extent of permanent damage, and how his or her lifestyle changes. In a car accident, the more severe the injury, the higher the likely settlement value. This is because the cost of treatment, chances of permanent impairment, and anticipated pain increase with the severity of the injury.

A fair settlement considers the expenses you have already incurred, those you will incur in the future, and compensation for non-economic damages such as pain and suffering. As the severity of your injuries increases, so does the medical care required, the length of time it takes to recover, and the pain and suffering you are likely to endure. The more severe the injuries, the higher medical bills, lost wages, and long-term effects become, and therefore the greater the damages you can claim.

You should keep in mind how to document your car accident injuries. Detailed medical records and statements from medical professionals can greatly help with settlement negotiations. They establish the extent of your injuries and the level of your pain and suffering, which improves your chances of receiving maximum compensation for physical injuries. Proper documentation also helps tie your injuries to the accident.

Lost Wages and Future Earning Capacity

Sustaining an injury can impact your ability to work and earn a living, both during the recovery period and in the long run. As a result, you may suffer financial losses due to the inability to receive wages and other forms of income. Two types of economic damages result from lost income due to an injury.

  • Lost wages: Damages related to lost wages refer to the actual income or wages you lost during the period between the accident and when you could return to work at full capacity. Lost wages include wages from work, commissions from sales, bonuses, and other benefits. Lost wages can be estimated with reasonable certainty.
  • Lost earnings capacity: This is a term used to refer to the loss of ability to earn income in the future. It aims to make up for the income you would have earned but will miss out on due to the accident or incident that caused the loss of earning capacity.

The longer you are away from work and the more your future earning capacity is impacted, the higher the settlement amount will be.

How to Evaluate Damages and Compensation After a Car Accident

You may seek compensation for economic and non-economic damages when submitting a claim. The category of economic damages addresses financial losses, whereas non-economic damages deal with non-financial losses.

Economic Damages Calculation

Economic damages, also referred to as special damages, are intended to compensate you for financial losses you may have suffered as a result of an accident. The aim is to restore your financial situation to what it would have been if the accident had not occurred. To calculate the amount of economic damages, you must add all the financial expenses and losses incurred due to the accident.

In a car accident case, several types of economic compensatory damages are most claimed. These include medical bills, such as hospital expenses, ambulance fees, doctor’s appointments, imaging and blood tests, physical therapy, prescription medications, medical devices, and other related expenses.

Lost wages are also considered, which includes any time taken off work to recover, along with benefits that would have been earned during that period. If the injury results in a permanent disability that prevents a return to the same job or an equal-paying job, damages for lost earning capacity may also be claimed. In addition, you may also claim compensation for the repair or replacement costs of your vehicle.

Non-Economic Damages Calculation

Non-economic, or general damages, refer to damages that do not have a specific dollar amount attached to them. Although there might be no monetary harm, the law recognizes that you can experience other forms of harm that warrant compensation. These damages are more challenging to calculate, as no corresponding bill or record puts a price tag on the injury. Non-economic damages compensate you for pain and suffering, emotional pain or anguish, loss of consortium, disfigurement or disability, and loss of enjoyment of life.

Factors that are considered when determining your damages include:

  • The extent to which the injury is permanent.
  • The degree of severity of the injury or trauma.
  • Any impacts on your daily life.
  • The estimated duration of the recovery process.

Common Mistakes to Avoid During the Settlement Process

If you have submitted a personal injury claim following an accident, at some point, the insurance company will initiate negotiations for a settlement. However, there are mistakes that victims may make during the negotiation process, which can negatively impact the car accident lawsuit payout.

Settling too Quickly

Settling your injury claim too quickly is not recommended, even if you don’t want the process to drag on. The insurance company will likely begin negotiations by offering an amount that is lower than what your case is actually worth. In many cases, the initial settlement fails to compensate a victim for the true cost of his or her injuries.

Moreover, injuries may not always be immediately apparent and could be worse than they initially seem. Healing might not progress as expected and unexpected complications, like abscesses or infections, can arise. You will only get one chance to settle your injury claim, so if things get worse later, you won’t be able to return for more money.

Considering the long-term impact of your injuries is crucial. Ignoring these factors could result in a lower settlement offer. Therefore, it’s important to review the offer carefully and determine whether it is fair and reasonable. Don’t take a quick settlement, but be prepared to negotiate for a better offer.

Failing to Consult With a Lawyer

If you don’t hire a car accident lawyer, you may end up making costly mistakes involving your medical bills and other expenses. To prove that you are entitled to compensation, you need to show that you suffered injuries because of another person’s negligence. You’ll also need enough evidence to prove that the other party was negligent and caused your damages. A personal injury lawyer knows how to prove these elements of negligence and will investigate to gather supporting evidence. Without a personal injury lawyer, you may not collect enough evidence or even know what evidence is required to prove your case, which will reduce the chances of getting a fair settlement.

In addition to this, a lawyer can determine whether the settlement offer is fair by using his or her experience. If the offer is not reasonable, your lawyer can negotiate on your behalf to get a higher amount. Not seeking a personal injury lawyer can lead to a lower settlement amount.


Jay A. Bolotin is a partner at the injury law firm of Young, Reverman & Bolotin. Serving the people of Indiana, Kentucky, and Ohio, Jay dedicates his career to helping clients in the tri-state area obtain financial compensation after suffering serious injuries. He focuses his practice on cases involving car accidents, trucking accidents, dog bites and animal attacks, and other types of personal injury incidents.

Years of Experience: More than 25 years
Registration Status:: Active
Bar Admissions: Illinois, Kentucky, Ohio, Indiana, and Cincinati Bar Association