How are rear end collision settlement amounts determined?

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Question:

How are rear end collision settlement amounts determined? What kinds of things do I need to consider to figure out if the insurance company is offering me a fair settlement amount?

Answer:

Rear end collision settlement amounts are set based on the amount of damages you have sustained stemming from the rear end accident. "Damages" is another way of saying "compensation for your losses," monetary and otherwise. 

There is no strict formula when it comes to figuring out how much a settlement is worth in a rear-end car accident case. But in practice, insurance companies calculate the value of car accident settlements based on the following.

First, the dollar value of all economic-based damage claims made by a victim, which are known as special damages. These special damages include items such as medical bills, rehabilitative care costs, and other definitive financial losses incurred by the victim as a result of the auto accident.

Second, the amount of lost income is calculated, using the previous income earning figures of the victim and multiplied by the amount of time away from work, as a result of the rear end collision. 

Third, the amount of non-economic damage compensation is calculated -- also known as general damages. General damages, which include pain and suffering, are calculated by multiplying the special damages figure by a multiplier of between 1.5 and 5, maybe using a multiplier up to 3 for minor injuries, and a multiplier closer to 5 (and maybe even higher) for more serious injuries, and permanent disability.

Finally, all three figures are added together.

Here's an example of how the formula might work. Let's say Kathleen was rear-ended at a stoplight. Her "specials" (medical treatment) amounted to $500, and she had no long-lasting injuries. So, to calculate general damages, an insurance adjuster might start negotiations with a figure of between $750 and $2,500 (1.5 to 5 x $500), although it would probably be closer to $1,000 or $1,500 since Kathleen's injuries weren't that serious. This number would then be added to Kathleen’s lost income to get the figure from which negotiations might start.

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