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Fault:
The Final Frontier |
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Once
you know how insurance companies use the damages formula to
start negotiating, you are close to figuring out the total value
of your claim. |
The
other elements used to decide what your claim is worth boil
down to how the insurance company thinks a jury would decide
your claim if it wound up in court.
In measuring its chances in court, the insurance company has
to figure in the cost of putting up a legal fight, on top of
what a jury might award you, compared with the amount for which
your claim could be settled without going to court.
The
extent each person is at fault is the most important factor
affecting how much the insurance company is likely to pay.
The damages formula gives you a range of how much your injuries
might be worth, but only after you figure in the question of
fault do you know the actual compensation value of your claim
-- that is, how much an insurance company will pay you. |
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Demystifying
the Damages Formula |
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When
determining compensation, it is usually simple to add up the
money spent and money lost, but there is no precise way to put
a dollar figure on pain and suffering or on missed experiences
and lost opportunities. That's where an insurance company's
damages formula comes in.
At the beginning of claim negotiations, an insurance adjuster
adds up the total medical expenses related to the injury. These
expenses are referred to as "medical special damages" or simply
"specials." That's the base figure the adjuster uses to figure
out how much to pay the injured person for pain, suffering and
other non-monetary losses, which are called "general" damages.
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The
adjuster multiplies the amount of special damages by 1.5 or
2 when the injuries are relatively minor, or up to 5 when
the injuries are particularly painful, serious or long-lasting.
(The multiplier may be as great as 10 in extreme cases.) The
adjuster then adds on any income lost as a result of the injuries.
That's
all there is to the formula. However, this figure -- medical
specials multiplied by a number between 1.5 and 5, then added
to lost income -- is not a final compensation amount buy only
the number from which negotiations begin.
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Small
Claims Court |
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Small
claims court judges resolve disputes involving relatively modest
amounts of money. The people or businesses involved normally
present their cases to a judge or court commissioner under rules
that encourage a minimum of legal and procedural formality.
The judge then makes a decision (a judgment) reasonably promptly.
Although procedural rules dealing with when and where to file
and serve papers are established by each state's laws and differ
in detail, the basic approach to properly preparing and presenting
a small claims case is remarkably similar throughout the United
States. |
| In
a handful of states, including California, Nebraska and Michigan,
you must appear in small claims court on your own. In most states,
however, you can be represented by a lawyer if you like. But
even where it's allowed, hiring a lawyer is rarely cost-efficient.
Most lawyers charge too much given the relatively small amounts
of money involved in small claims disputes. Happily, several
studies show that people who represent themselves in small claims
cases usually do just as well as those who have a lawyer. |
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