After determining what your case is worth, you should usually ask for around double that amount in your demand letter. This initiates the settlement negotiation process and gives you room to compromise. It also helps you avoid asking for too little and the insurance company agreeing to that amount.
Determine what your personal injury case is worth
Before asking for a settlement amount, you should determine what your case is worth. This often involves using a settlement formula like the multiplier method to estimate your losses. That amount would then be decreased by:
- your shared fault for the accident,
- any applicable damage caps, and
- the lack of available insurance coverage.
Multiplier method
Under the multiplier method, you:
- total up your economic damages,
- use a number between 1 and 5 based on the severity of your injuries and how much the accident has impacted your quality of life,
- multiply your economic damages by this number to estimate your noneconomic damages, and
- add your economic losses and noneconomic damages
Your economic damages are those that can be easily stated in a dollar amount. This includes losses like your medical bills, property damage, and lost income and earning capacity.
Your noneconomic damages are those that cannot be easily stated in a dollar amount. This includes things like your physical pain and suffering or your emotional distress.
The multiplier would be a 1 or close to it if you made a full recovery in a few months. It would be a 5 or close to it if you suffered disabling and permanent injuries.
For example: Mitch is hurt in a car accident. His medical expenses and other economic losses are $100,000. It takes a few years for him nearly to make a complete recovery, and he will have a slight disfigurement. A multiplier of 2 is used, which estimates his noneconomic losses at $200,000. Added together, his personal injury case is worth an estimated $300,000 in financial compensation.
The personal injury lawyers at our law firm have found that this is a reliable way to estimate your losses to see what a fair settlement offer would look like.
Shared fault
If you were partially to blame for the accident, state shared fault laws will reduce your recovery. At trial, the jury would assign each party a percentage of fault for the accident. What happens next depends on the state where the accident occurred:
- in the couple of states that use contributory fault rules, you would recover nothing if you were at fault at all, even just 1 percent,[1]
- in the states that use pure comparative negligence, your recovery would be reduced by your share of fault, no matter how high it was,[2] or
- in the states that use modified comparative negligence rules, your recovery would be reduced by your share of fault, but you would recover nothing if you were more than half at fault.[3]
Even though this would happen at trial, a personal injury settlement aims to match the potential verdict. This means these shared fault rules will impact settlement negotiations and what you should ask for in your demand letter.
Damage caps
Some states have damage caps that limit how much victims can recover in certain personal injury claims.
For example, California caps the noneconomic damages that you can recover in a medical malpractice claim to $390,000 for non-fatal cases and $550,000 for wrongful death accidents in 2024.[4]
Insurance policy limits
If there is no insurance coverage for the accident, or if the policy limits are lower than what you are entitled to receive, you are unlikely to recover the payout that you deserve. The insurance company will pay until the policy limit is reached and then leave the case. You will have to recover the remaining amount from:
- your own insurance policy,
- the insurance of a third party involved in the accident, or
- the defendant’s personal accounts and assets.
Start with a higher personal injury settlement amount
Once you have estimated the value of your case and reduced it appropriately, you can make an informed demand for compensation. Our personal injury lawyers have found that increasing the amount of compensation that you are owed by 75 to 100 percent, or even more than doubling it in some cases, can be a good way to initiate the case.
Doing so can:
- avoid a situation where you have underestimated your losses and demand too little, only for the insurance company to accept your lowball amount eagerly, and
- provide you with room to compromise on the settlement amount.
For example: Mitch’s case is worth an estimated $300,000. He and his lawyer ask for $600,000 in their demand letter. The insurance company counteroffers $200,000. After months of negotiations, the case settles for $350,000.
Asking for too much in the initial demand, though, can backfire. The insurance company may decide that it is unreasonable and close off further settlement negotiations.
There is no average personal injury settlement
Our legal team of personal injury attorneys often stress that there is no “average” personal injury settlement because there is no “average” personal injury case. Every case is unique.
For example, according to the Insurance Information Institute (III):
The average insurance claim for a car crash that caused bodily injury was $26,501 in 2023.[5]
However, this number is likely so low because of how often the injuries suffered in a crash are minor injuries. Accidents that cause fatal or serious injuries, like a traumatic brain injury, are relatively rare. When the severity of the injuries that you have suffered is significant, the settlement agreement will frequently be for well over 10 times this purportedly average personal injury settlement amount.
How a personal injury lawyer can help
An experienced attorney can help accident victims by:
- gathering the necessary information to estimate the value of your case,
- estimating the out of pocket costs for your future medical treatment,
- ensuring your medical costs are covered by your healthcare provider while your case moves forward,
- dealing with the insurance adjuster,
- showing the insurance company that you intend to invoke your rights and demand the compensation that you deserve,
- advocating on your behalf during the negotiating process,
- informing you about the settlement and legal process,
- finding alternative sources of insurance coverage, if what exists is inadequate, and
- continuing to fight for you by filing a personal injury lawsuit, if necessary.
In many cases, the higher settlement offers that get made after securing legal representation covers your lawyer’s contingency fee.
Legal Citations:
[1] See Coutlakis v. CSX Transportation, Inc., 796 S.E.2d 556 (2017) (Virginia).
[2] Li v. Yellow Cab Co., 13 Cal.3d 804 (1975) (California).
[3] Texas Civil Practice and Remedies Code 33.001.
[4] California Civil Code 3333.2 CIV and California Assembly Bill 35.
[5] Insurance Information Institute, “Facts and Statistics: Auto Insurance.”
