The overwhelming majority of car accident claims settle through the insurance claim process. Before you negotiate a settlement with an insurance company, you need to figure out what you think your claim is worth. Most car accident attorneys and insurance adjusters use the "multiplier" method to get a ballpark estimate of the value of a claim.
In this article, we'll answer your questions about car accident settlement formulas, including:
To understand how the multiplier method works, you first need to understand what kinds of damages (monetary compensation for harm) are typically available after a car accident. Car accident damages can mostly be grouped as "special" (often called economic) and "general" (or non-economic). (Punitive damages are rarely available in car accident cases.)
Special damages are financial losses related to the accident. Common categories of special damages include:
General damages are non-monetary losses. They tend to be much harder to calculate than special damages because they are more subjective. General damages can include:
Given the insurance industry's obsession with statistics, and the fact that there were approximately 6,756,000 traffic crashes in 2019, you might assume that there's a universal formula to determine the value of a car accident claim. But no two car accident claims are exactly the same. So, instead of a universal formula, insurance adjusters rely on the multiplier method to estimate the value of a claim and kick off settlement negotiations.
In this kind of calculation, the adjuster:
Here's an example of how the multiplier method might work in the real world. Let's say you were on your way home from a party when a driver rear-ended you at a stoplight. Your face hit the steering wheel and you had to get stitches and some dental work.
Your medical and dental bills totaled $5,000. The insurance adjuster used a multiplier of 2 to estimate your general damages (see below for more on how adjusters and others decide on multipliers). So, in the adjuster's opinion at least, your general damages are worth about $10,000 ($5,000 x 2). You had to miss several days of work while you recovered and for medical appointments. Your lost income added up to $3,000.
Your ballpark estimated damages then, including pain and suffering, would be: $5,000 (medical special damages) + $10,000 (estimated general damages) + $3,000 (lost wages). But keep in mind that the adjuster probably isn't going to come close to offering you $18,000 when making a first settlement offer. What the insurance company is really trying to do here is figure out what a jury might award you if your car accident case goes to trial and settle for something less than that amount.
You can use Nolo's personal injury settlement value calculator to get a reasonable dollar amount for your claim.
As you can imagine, deciding which multiplier is right for your case will likely be a point of contention between you and the insurance adjuster. You'll argue for a higher multiplier (like a 4 or 5), while the adjuster is likely to push for a lower multiplier.
Factors that can raise or lower the multiplier in a car accident claim, include:
Adjusters will also ask:
If you have questions about the multiplier method, talk to a lawyer. A skilled lawyer can help you estimate the value of your case and negotiate for the best settlement possible. Learn more about how a car accident lawyer can help you and how to find the right car accident attorney.