How Is a Car Accident Settlement Calculated? The Truth Behind Your Compensation

In 2018, there were 6.7 million car accidents each year.

If you were recently in a car accident, you might be wondering how much you could get from a car accident settlement.

The short answer is that it can be different for every scenario. However, we can give you some hints to let you know how to calculate it, so make sure you keep reading!

How It’s Calculated

First, you’ll have to understand the different factors that go into calculating the average car accident settlement.

Usually, a major accident will be worth a lot more than a small one with minor damages and injuries. If there is a fender bender or deaths in the accident, you’ll have more of a chance of getting more money.

Some things that they will look at regardless of the type of accident is how bad the damage to the vehicle is.

They’ll also look at how bad the injuries are and how long they lasted. If you or your passenger had to receive medical attention and you have a lot of medical bills, the insurance company will take this into account.

Because of your injuries, you may have lost time at your job as well. If you missed time at work or were disabled and lost your job, this will also result in a higher settlement.

Information You’ll Need

If you’ve been in a serious car accident, you should hire a car accident attorney to help you with your case. After you’ve done that, you’ll need some information to give them.

Car Damages

They’ll likely ask you for the total cost of all your injuries or for how much it cost to repair your car. If you can, try and calculate how much your car was right before the accident.

When you then look at the cost to repair the car, you should look at how much each specific part cost. Don’t just estimate how much you think it will cost because you’ll end up getting less from your settlement.


Next, you’ll also have to figure out how much your injuries from the accident cost you. It can be difficult to calculate this, but there are a few ways to do it.

For example, if you are a young athlete who got into an accident and are now disabled, you lost a lot more of your life and freedom than someone who is older or already disabled.

Gathering all of your medical bills from the accident will be a great place to start, but you’ll also have to figure out how to calculate any emotional damages as well.

The Multiplier

Once you give all of this information to your lawyer, they’ll be able to start determining the value of your claim. One common method they use to do that is the multiplier method.

They’ll take some of the factors mentioned above and then use a multiplier that insurance companies use. Normally, the multiplier they will use is a two or a three. They multiply this by the factors in your accident, and this is how they come up with a specific number to put on your claim.

However, this will still just be an estimate, but it’s a good starting place to figure out how much the settlement could be worth.

So for example, if your medical bills were about $4,000, an insurance adjuster would multiply that by two or three to figure out how much your claim would be. So if they used two as a multiplier, then your claim would be worth around $8,000.

Insurance companies use this based on statistics of other crashes. By using a multiplier, they are trying to guess how much a jury would think is reasonable to award you.

Damage Formula

Instead of the multiplier formula, they might also try using the damage formula.

The person who caused the accident and is at fault will talk to their insurance company. The insurance company will then figure out what the sum of the medical bills and damages are.

They’ll have a category of special damages as well, like emotional problems, suffering, or other categories that are hard to put into specific damages. Then they’ll use a lower multiplier to do that as well.

Depends on the State

Lastly, how much you get will depend on what state the accident happened in.

For example, there are some states where the person who caused the accident will actually be held responsible, but there are some states that are a “No-Fault” state.

If your car accident happens in a “No-Fault” state like Florida or Michigan, the way the insurance company calculates the settlement will be a little bit different.

Those states normally have an injury threshold requirement, meaning that the injury has to be serious enough to actually receive money from the car accident.

Learn More About How to Calculate a Car Accident Settlement

These are only a few ways to calculate a car accident settlement, but there are many more factors that will determine how much you get from it.

When in doubt, make sure that you hire a car accident lawyer. They will ensure that you get the most money possible out of your lawsuit, and they’ll help you navigate all the legal jargon and procedures.

They’ll also talk with the insurance companies so that you don’t have to deal with them since you already have enough on your plate.

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Hi, I'm Steven Franklin and I'm the founder of This site is a collection of resources related to personal and sports injuries, while also providing resources for injury law firms and attorneys as well.