How Do Insurance Companies Calculate Settlements for Car Accidents?

With nearly 264 million vehicles on the road and 218 million registered drivers, the United States’ roads are among the busiest in the world. As a result, they’re also a major contributor to global crash fatality and injury statistics.

Even with the advent of new vehicle safety systems, every year, an average of 6 million auto accidents take place on our roads, amounting to over 3 million visits to the emergency room, including 2 million permanent injuries. A vast majority of those injured in auto accidents will file a personal injury claim, which sees insurance companies pay out billions of dollars every single year.

If you’ve been injured in a Florida auto accident, you may want to know how much compensation you may be entitled to. While there’s no definitive amount that each type of injury attracts, understanding how insurance companies calculate settlement amounts may help you estimate your entitlements.

But first, let’s look at what you can actually seek compensation for in your personal injury claim.

Pain and Suffering

When you file a personal injury claim, the compensation you are asking for is mainly to compensate you for ‘pain and suffering’ you have sustained as a result of an accident. This umbrella term covers all the ways in which a crash has negatively impacted you, not just physical pain.

Pain and suffering also covers emotional and psychological injuries which can manifest in a multitude of ways depending upon the individual. Anxiety, fear and ‘loss of enjoyment of life’ are some of the most common mental side effects of an auto injury but the myriad of possibilities here is far-reaching.

Often, victims of car accidents are so focused on the actual injury they sustained, they forget about all the adverse ways in which their accident has impacted them. They fail to consider the indirect consequences and, when filing a claim with no legal assistance, they end up receiving an amount in line with the tangible costs (ie. medical bills), rather than the intangible pain and suffering.

This is just one strong argument for engaging the services of an auto accident personal injury lawyer to help negotiate the compensation you truly deserve. They are well-versed in looking at your individual case with an expert eye to determine the true extent of your pain and suffering, even if you haven’t acknowledged it yourself.

Future Pain and Suffering

While you might be solely focused on how your accident is affecting you now, personal injury lawyers are experts in determining long-term pain and suffering. Many people who suffer serious injuries are generally so intent on recovering from their immediate injuries that they don’t consider the implications of their life-changing injury in years to come.

Those suffering back injuries may have to spend more money on specialized equipment to help them live comfortably. Those with severe whiplash may need ongoing treatment by a physiotherapist. The list goes on, but a personal injury lawyer knows how to assess your future pain and suffering by determining how your injury will affect you during the course of your life.

Pain and Suffering Proof

Generally, insurance companies will require proof that your pain and suffering is to the degree which you claim in order to take it under consideration in their calculation.

While medical bills speak for themselves and prove that you have, in fact, been treated for your injury, to prove the true extent of your pain and suffering you may need more than just receipts. Statements from your doctor or medical expert detailing your ongoing treatment requirements and estimated recovery time can be a tremendous help to your case.

If you’re suffering from emotional and mental trauma as a result of your accident, proving this may be more difficult. Many of us still only visit the doctor for physical pain, forgoing treatment for our mental health, but if you want to claim for emotional distress in your personal injury case, seeking the help of a mental health professional may be the best course of action. Not only will this provide the treatment that you probably need, it’ll also act as proof to the insurer of your mental injury.

How Do Insurance Companies Calculate Settlements for Car Accidents?
If you don’t want to go down the path of medical help in this area, you still may be able to prove your mental trauma in other ways. For example, statements from friends and family about how your accident has negatively affected you on a level deeper than your medical records suggest will go a long way towards helping your case. Furthermore, you should keep a diary documenting your day-to-day outlook and feelings following your accident too.

Your lawyer will be able to better advise you on the types of evidence you should be collecting for your own unique case.

What Else Can You Claim for in Your Personal Injury Claim?

While pain and suffering is usually the main reason car accident victims make a claim, there are a number of other aspects you can claim for too. Many of these are economic or tangible damages and hence are much more easily proved when it comes to requesting compensation or reimbursement for them.

Types of economic damages you can claim for are, but not limited to:

  • Personal property damage and repair cost
  • Medical bills
  • Loss of earnings, and future loss of earnings
  • Costs which were indirectly occurred as a result of the accident (car hire, for example)
  • Loss of personal effects (glasses broken in the accident, for example)

Unlike pain and suffering, generally, you can only make claims for these damages upon presentation of tangible proof. They are not usually open to interpretation.

So, How Do Insurance Companies Calculate Your Settlement?

Once you have presented your claim and have detailed all of the aspects you’d like to claim for (and provided the proof to back it up), the insurer will then decide exactly how much your claim is worth.

It’s important to note that there is no exact calculation method by which insurers do this. In fact, Florida Standard Jury Instruction 501.2 states that “there is no exact standard for measuring such damage. The amount should be fair and just in the light of the evidence.”

How Do Insurance Companies Calculate Settlements for Car Accidents?
The problem lies in whether what you and what the at-fault party’s insurer deems to be ‘fair and just’ are aligned. Thankfully, many personal injury cases are settled without court intervention, meaning that generally, it is the case that the victim and insurer are on the same when it comes to the semantics, but that doesn’t mean that there’s no back and forth when it comes to negotiations.

While economic damages such as medical bills, damage to property and loss of wages can be clearly calculated, non-economic damages can be much harder to attribute a dollar value to. Two methods of calculation are often used by insurance companies to calculate a fair settlement amount.

The first takes the sum of all the victim’s damages which have a tangible amount attached to them and multiplies it by a number (usually between 1 and 5, depending upon the severity of the injuries). This method is used in an attempt to provide the victim with an appropriate level of compensation for their pain and suffering, as well as reimbursing them for direct economic costs.

The second method calculates a ‘per day’ rate which is calculated from the day following the accident until the victim has fully recovered. Unfortunately, this method typically doesn’t work for those with permanent injuries.

These days, many companies use computer programs to help them calculate a settlement figure. These programs take into consideration the type of injury, medical treatment sought and consequential (estimated) pain and suffering. They also raise the red flag if aspects of a claim appear suspicious (ie. if medical bills seem excessive for the type of injury).

Often, there may also be some negotiation between your attorney and the insurer, especially if the insurer has presented an initial offer which doesn’t adequately reflect the impact your accident has had on you.

What if You Don’t Feel Like Your Settlement Amount is Fair?

Most personal injury cases are settled outside of court. The insurer usually offers a settlement figure which is considered an acceptable amount by the victim and their attorney. It can sometimes be the case that a victim may have been expecting more than what is offered, but if their attorney feels the amount is fair, they will advise their client that further negotiation will probably not prove fruitful.

However, on the rare occasion where an insurer does not provide an offer that you and your attorney think is fair, you may need to take your case to trial to recover the compensation you think you deserve.

If you’ve been injured in a car accident call a Tampa car accident lawyer at Distasio Law Firm to see how we can help you put your personal injury case together and be compensated for your damages.


Our main office is here in Downtown Tampa, Florida in the Channelside neighborhood. Office in Wesley Chapel and Largo are available by appointment only.

Distasio Law Firm