3 MIN READ | Lifestyle

Ellen Diamond

How to Successfully Calculate Compensation for a Major Injury

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Ellen Diamond, (2021, May 17). How to Successfully Calculate Compensation for a Major Injury. Psychreg on Lifestyle. https://www.psychreg.org/how-to-calculate-compensation-injury/
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Accidents are daily occurrences, from a car, truck to traffic, workplace, and slip and fall accidents. When you sustain personal injuries from an accident, you are liable to get compensated either by your insurer or that of the at-fault party. 

How do you know if your injury is eligible for compensation? What are the compensations available for your type of injury? What damages can you apply for when you want to claim compensation? How do you calculate compensation for your injury?

Common injury claim damages

The entire process of calculating compensation for an injury could get overwhelming, bearing that in mind; a guide on compensation claims by https://horne.law recommends that you consult or hire a personal injury lawyer to help you navigate the process. Still, you may need to understand how personal injuries work and the damages you can apply for under the compensation claim before you do that.

When you get injured from an accident, there are varieties of injuries that you sustain, ranging from physical, social to mental damages. We categorize these damages as Special and General damages. 

  • Special damages. Also known as economic damages, are quantifiable because they are damages. You can easily measure the amount of money lost and will continue to fail because of the accident. Medical and rehabilitation expenses, property damage, lost income or wages, and future earnings are calculated as special damages. They have receipts to show the amount spent and formulas to predict what you will spend in the future.
  • General damages. Also known as non-economic damages are referred to as intangible losses sustained and have to continue enduring in the future because of the accident. Pain and suffering, permanent damage, or disfigurement are calculated as general damages. 
  • Punitive damages. There are also called exemplary damages, which are awarded as an extra to the injured party when it is a significant injury. The case is tried in a court of law. Though, most states do not allow punitive damages to be awarded in small claims. 

Having highlighted all these damages within personal injury claims, how do you calculate the compensation for each claim or damages, especially when it is a significant injury. 

Formulas for calculating compensation 

There are various ways for calculating compensation in a personal injury case. Still, it depends on when variables are used to depend on whether the injury sustained is minor or significant. 

Multiplier method

Insurance companies and lawyers favor the multiplier method as it helps determine how to award compensation to an injured party for general damages. We usually calculate it by applying a multiplier to the total of special damages, for instance, if they peg the medical and rehabilitation bill for an injured person at $4,000. The victim lost $1,500 in earned wages over 3 months, this is totaled to $5,500, and multiplied by a number between one and a half to five. 

The multiplier depends on several factors related to your case, which includes the seriousness of your injuries, the cost of damaged property, your prospects for a quick and complete recovery, the impact of your injuries on your day-to-day life, and whether the other party was clearly at fault for the underlying accident. 

The multiplier can be over five depending on the severity of your injury, as we assume that if the medical cost is high, then the injury sustained from the accident is significant. As an injured party, it is advisable to seek medical attention and keep documentation and receipts of your medical bills. 

Per diem method

Another formula used in calculating compensation claims to calculate pain and suffering damages is the per diem method, popularly known as the daily rate. This method involves demanding a specific dollar amount for every day you had to live with the pain caused by an accident. The daily rate calculation is usually used to justify the days you will not be earning wages or capable of working. Therefore, the daily earnings amount from an actual job is used as a per diem rate. 

For instance, if you earn $30,000 per annum at your last job, that is $120 per day. So, ask a certain dollar amount for every day you had to live with the pain caused by your accident. To calculate special damages, you multiply your $120 daily rate by 180 days of pain, and you arrive at $21,600.

Using the per diem rate for significant injuries can be inaccurate as you may not give a specific timeline for a full recovery. When it is a permanent disability, calculating lifetime earnings per diem basis may not be workable. 

Note that personal injury victims and lawyers can use both calculation methods, especially in significant accidents, and change them to suit the specifics of the accident to arrive at a settlement figure to be presented to the insurance company. 


Ellen Diamond did her degree in psychology at the University of Edinburgh. She is interested in mental health, wellness, and lifestyle.


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