How are accident claims calculated?

How are accident claims calculated?

To calculate car accident settlements, it’s essential to understand that each case is unique and therefore, the average settlement amount is not very helpful for victims. The specific circumstances of the collision determine the compensation amount for a car accident settlement.

For instance, if a crash victim only sustains minor property damage, their settlement offer from the insurance company would be considerably less than someone who loses a loved one in an accident or experiences permanent injuries. Therefore, the severity of the accident and the resulting damages are significant factors that determine the value of a car accident settlement.

The purpose of car accident settlements is to compensate the victim for their losses resulting from the accident. The average amount of a car accident settlement is determined by:

Medical bills
Lost wages
Pain and suffering
Emotional distress
Property damage

The amount of insurance coverage and the determination of fault are also significant factors that impact the average car accident settlement.

How are accident claims calculated?

Settlements: The Most Common Outcome in Personal Injury Claims

To begin with, it’s essential to understand the car accident settlement process before seeking examples.

In most states, the person responsible for causing the accident is liable for covering the victim’s damages, and their liability car insurance pays for medical bills, property damage, lost wages, and other losses.

The insurance company representing the at-fault party typically makes a settlement offer to the victims of the accident. This offer may be a lump sum payment, in exchange for which the victim relinquishes all rights to pursue further claims. If the victim agrees to the settlement, the case is resolved. However, if the victim does not feel that the compensation offered is fair, a car accident lawsuit may ensue.

While it is possible for car accident cases to go to court, the majority of cases are settled outside of court. According to a survey conducted by Martindale-Nolo, 98% of readers who received compensation for a car accident did so through a settlement, rather than a trial.

Settlements are often preferred by both parties as insurers typically want to avoid the costs of a trial, and victims often want to avoid the time and uncertainty involved with a trial.

How Long Will It Take to Get a Car Accident Settlement?

Car accident settlements typically occur relatively quickly, which is one of the advantages of settling a claim instead of pursuing a lawsuit.

Martindale-Nolo reports that on average, it took collision victims 10.7 months to receive a car accident settlement. However, more than half of the victims were able to resolve their claims within six months.

How Much Can I Get for My Car Accident Claim?

The amount of compensation awarded for a car accident claim is determined by several factors, including the extent of the damages incurred.

Average car accident settlement amounts may vary depending on the source of the data. According to the Insurance Information Institute, the average claim for physical injuries after a collision in 2020 was $20,235, while the average property damage claim was $4,711. However, a survey conducted by Martindale-Nolo of readers who made car accident claims between 2015 and 2020 reported an average settlement of $23,900, with most receiving less than $10,000.

Insurance Coverage

In most states, drivers are mandated to have liability insurance, which pays out compensation to victims when the policyholder is at fault. However, the insurance company will only pay up to the policy limits. If the damages incurred exceed the coverage amount, the insurer will not pay the excess.

While accident victims can pursue a claim against the at-fault driver directly for losses not covered by insurance, many do not have sufficient assets to pay additional damages even if awarded by the court.

As a result, if an insurance company offers a settlement that reaches the policy limit, pursuing a court case to try and obtain additional compensation may not be worth the effort.


When liability is unequivocal in a collision, it can lead to a larger settlement. The insurance company representing the at-fault driver will acknowledge responsibility and offer a fair settlement offer to avoid a lawsuit.

If fault is uncertain, no settlement offer may be presented, or the offer may be lower. Additionally, if fault is shared between the drivers, this can significantly affect car accident compensation. Here’s what happens when fault is divided, with both drivers partly responsible for the collision:

There are different rules for determining fault and compensation in car accident cases across different states. In some states known as contributory negligence states, a driver cannot receive any compensation from the other driver who was primarily at fault if the driver is even 1% responsible for the collision.

In pure comparative negligence states, however, a driver can still seek compensation from the other driver for their injuries, even if they were mostly at fault for the accident. For example, a driver who was 75% responsible for a crash could still pursue a claim against the other driver and receive compensation for 25% of their total losses.

In modified comparative negligence states, a driver can pursue a claim for compensation as long as they are not 50% or 51% responsible for the crash. However, compensation will be reduced based on the percentage of fault assigned to the driver.

Severity of Injuries

The severity of the injury is a crucial factor in determining the average settlement amounts in car accidents. According to the Martindale-Nolo survey, the average compensation for car accident victims who did not suffer any injury was $16,700, while the average compensation for those who were injured in the accident was $29,700.

State Laws

Some states operate under a no-fault system, where drivers must first rely on their own insurance coverage to pay for their injuries or those of their passengers. After their insurance coverage is depleted, they can then seek reimbursement from the other driver’s insurance policy. Personal injury protection must be purchased by drivers in these states, typically covering up to $10,000 in medical bills and lost wages. Compensation for pain and suffering is generally not available for minor injuries.

In fault states, however, the driver responsible for the accident is always liable for damages. In such states, even seemingly minor accidents may result in settlement offers from the at-fault driver’s insurer that may provide more comprehensive compensation.

Financial Loss

The extent of financial loss is also a crucial factor affecting the average compensation for car accidents. The purpose of the settlement is to provide full compensation to the victim for the losses incurred in the accident, including both injury-related losses such as lost wages and property damage losses.

If the driver has suffered significant losses due to missed work, high medical bills, and significant property damage, the settlement amount should reflect these losses as well.

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