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Car Accident Settlements: Average Payouts, Expectations, and FAQs

A car accident settlement is nothing more than an agreement between two parties to close or "settle" a case. And yet, as simple as that may sound, the legal implications can actually be quite complicated

As a car accident attorney, I can tell you that car accident settlements are among the most common cases I deal with every day in my law practice — and the average payout amounts are often the highest as well. 

It makes sense. After all, there are millions of auto accidents every year in America. That's potentially millions of car accident victims looking to file personal injury claims to demand rightful financial compensation for their losses and damages — maybe you?

If you've been injured in a car crash, you're likely wondering what the car accident settlement process entails. 

Yes, as an experienced attorney in car accident cases, slip and falls, and other types of personal injury, I'll tell you that car accident settlements are a complicated legal matter. That's why I wanted to tell you what to expect for a car accident settlement in today's article — read on to find out more.

What is the Average Car Accident Settlement Amount? 

If you're like most people, you want to know how much financial compensation you can expect for your car accident settlement.

According to the Insurance Information Institute, the average auto accident claim payout in 2018 was $19,626. Of this sum, the average claim for bodily injury was $15,785, and for property damage, that average number was $3,841.

It's important to remember that these are only averages; this news doesn't mean your settlement amount will be anything close to these figures. In all likelihood, your settlement offer could be quite a bit more. Or, if your accident was only minor, you might very well receive a lot less.

You see, every personal injury case is unique, so it is not easy to confidently tell you what to expect in your settlement. There are countless variables for every case used by insurance companies to calculate the final settlement amount. 

I recommend anchoring that $19,626 figure in your mind as you draft your demand letter to the insurance claims adjuster — use this number to help calibrate your expectations. In the next section of this article, you'll learn the five factors that will help you estimate your claim's real value. 

5 Factors That Determine the Value of a Car Accident Settlement

If you ever hear the term case value it usually is referring to how much your case is worth based on the sum of your financial or non-economic losses. The value of your case is determined by a number of different factors, such as the circumstances of your accident, who is at fault, and the extent of your damages.

To calculate the value of your case, you'll need to consider the following five factors. These are among the factors the insurance company will check to come up with your settlement offer. 

Tip: Adding up the approximate costs of each of the five factors will give you a reasonable estimate of what you stand to gain financially for your car accident settlement.

1. Medical Expenses

When thinking about how much you stand to receive in your car accident settlement, it may help to consider which expenses are the most costly. 

Since your compensation is determined by the accident's damages, starting with the most costly economic damages will help you get a reasonable estimate of your claim. 

Medical expenses are at the top of the list because car accidents often result in serious injury. It is important that you keep all documents, medical reports, and receipts of medical treatment or services provided to you after your accident. These services may include:

  • ER visits
  • Hospital stay
  • Surgical care/ICU
  • Medical devices
  • Doctor checkups
  • Prescription medication

Remember, the better your recordkeeping, the more effectively we can demonstrate the severity of your situation and negotiate with the insurance company to maximize your settlement offer. 

2. Proving Liability

When filing an insurance claim, proving liability will have a significant impact on the amount of compensation you stand to receive. After all, proving liability is an essential component of any litigation. 

At their core, personal injury claims are about establishing fault and requesting fair compensation from the appropriate party to help the no-fault driver recover their losses. 

In a car accident claim, the victim usually files a lawsuit against the at-fault driver's auto insurance policy, who will then work with an insurance adjuster to determine fair compensation.

Cases where it was clear who was at fault usually result in higher settlement amounts, and to prove liability, you must show:

The defendant owed you a duty of care  —"Duty of care" is a legal term that has a different meaning depending on the defendant's (tortfeasor) role. In an auto accident, the duty of care that a driver owes to others is to drive safely and adhere to traffic laws.

The defendant breached this duty of care —Next, you must show that the defendant breached this duty of care. This breach is what caused the accident. In this context, a violation of the duty of care could be that the driver was texting while driving, distracted in some other way, or even under the influence.

Through careful investigation, an experienced attorney can help you prove that the breach in the duty of care caused your accident. Your attorney will work with you to collect evidence about the defendant's liability. 

This may include medical records, photos of the accident, eye witness testimonies from the scene of the accident, police records, and any additional documentation that accurately tells the story of what happened.

3. The Severity of Your Injuries

The severity of your injuries is among the most significant determining factors of your settlement amount. 

In general, the more serious the injury, the higher the settlement will be. And if any permanent injury resulted from your accident, you stand to increase the value of your payment even more.

Think about it: Serious, potentially life-threatening injuries are more likely to rack up serious medical bills. The more damage and harm you sustain because of an auto accident, the more financial resources, time, and perseverance will be required for you to make a full recovery. 

No matter the extent of your injury, you are rightfully entitled to accept compensation for your pain and suffering. That said, the more significant the impact on your quality of life, the higher your settlement payout will likely be. 

4. Your Ability to Work

Suppose the new injuries you've sustained from a car accident have left you unable to work. In that case, the insurance adjuster will include these costs in their calculation of your settlement offer.

Lost wages are the amount of time and money you've lost from not working because of your accident injuries.

A skillful personal injury attorney will do everything they can to get you full compensation for your lost wages from your time away from work. 

5. The Impact on Your Quality of Life

This last factor accounts for the overall impact of the accident on your life.

These are typically non-economic damages that don't have an exact monetary value, but nevertheless have a significant effect on one's quality of life.

Factors that impact your quality of life may include:

  • Pain and suffering
  • Disfigurement
  • Disability
  • Loss of ability to enjoy life
  • Embarrassment
  • Humiliation
  • Anxiety or depression
  • Emotional distress
  • Lowered quality of life
  • Loss of consortium (if a loved one lost their life in the car accident)

What's Included in a Car Accident Settlement?

A car accident settlement will compensate you for any damages that were wrongfully caused to the victim due to the accident. 

There are two kinds of damages: economic and non-economic. 

Economic Damages — These account for any expenses you paid for out of your pocket. Economic damages include hospital bills and emergency room visits, to the time you take off work or time away to recover. 

Economic damages typically include: 

  • Medical bills and related expenses
  • Property damage
  • Lost wages and income
  • Lost future earning ability

Non-Economic Damages — Pain and suffering is considered non-economic damage, which doesn't have an exact price tag. Non-economic damages cover a wide range of hardships such as:

  • Pain and suffering
  • Disability
  • Disfigurement
  • Loss of consortium or companionship
  • Loss of quality of life

If you require counseling or therapy for depression or anxiety, you may be able to put those expenses toward your claim as well. 

Financial compensation for a car accident injury is intended to help the victim recover to how they lived before the accident occurred. That means a settlement may cover injuries and property damage to the extent that is necessary.

Car Accident Settlement FAQs

How Long Do Car Accident Settlements Take?

Car crashes are no trivial matter. Especially when serious injuries result — like back injuries, concussion, or disability — the car accident settlement process can take some time. 

Just as there is no precise calculator available to determine your settlement amount, there is no easy way to predict how long a car accident case may take. There are many steps and factors involved in personal injury lawsuits, including negotiations with the at-fault driver's insurance company, injury, property damage, police reports, etc. 

What is the Average Car Accident Settlement Payout?

According to the Insurance Information Institute, the average auto accident claim payout in 2018 was $19,626. Of this sum, the average claim for bodily injury was $15,785, and for property damage, that average number was $3,841.

How Are Car Accident Settlements Calculated?

Contrary to what many articles might have you believe, insurance companies use no formal calculator to calculate the average car accident settlement amount. If your vehicle was damaged, but there were no bodily injuries, you'll likely be reimbursed based on the insurance coverage policy limits. 

If you are injured, then pain and suffering will be factored into your calculation. Settlements are typically higher for more severe or permanent injuries. 

One way to approximate your settlement's value is to add up the expenses associated with your accident and injury. These expenses may include things like medical bills, car repairs, lost wages, and income. 

Is a Car Accident Settlement Taxable Income?

Car accident settlements are generally not taxable. However, there are exceptions, according to the IRS:

"If you received a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement in your income." 

How do I Negotiate a Car Accident Settlement?

The most challenging part of a car accident settlement is negotiating with the insurance company. An insurer may reject your claim or offer a settlement that does not reflect the true value of your case. Furthermore, insurance companies will often lead you to believe that their decision is final and that you have no other options. 

The truth is, unless you are a skilled negotiator, you are better off letting an experienced personal injury lawyer handle your negotiations with the car insurance company for you. An attorney will anticipate all the tricks and tactics adjusters like to use to limit your settlement offer. 

Insurers can and will hold what you say against you, and will use anything they can to reduce the compensation that they’re required to pay for your losses. An experienced car accident attorney can help you in the following ways:

  • Investigate your accident
  • Obtain evidence that can prove fault and liability
  • Estimate the value of your case
  • Engage with the insurance company on your behalf
  • Fight for a fair settlement or the maximum possible payout
  • File a lawsuit if the insurer refuses to settle

Do I need a lawyer for a car accident settlement?

Whether or not you need to hire a car accident lawyer depends on the severity of your injuries or property damages. It also depends on how proactive you are in terms of fighting for your rights and whether the case is brought to court. 

For relatively mild conditions (whiplash, for instance), you may feel comfortable handling the situation alone. However, it is absolutely vital for severe injuries that you seek a lawyer to protect your rights and seek fair compensation. 

Can you get a loan on a car accident settlement?

If you are waiting for your settlement verdict and have expenses to cover, a pre-settlement loan is an option. Lending companies that offer pre-settlement loans will evaluate your car accident claim details, estimate your settlement's value, and then loan you the money while your compensation is being decided.

With the right legal representation, you may be able to get the maximum insurance settlement that reflects what your case is truly worth. 


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