How legal settlements work
Every legal claim follows a basic valuation framework, even though outcomes vary wildly based on your injuries, your state's fault rules, and the defendant's insurance coverage. Understanding this framework puts you in a stronger position when the adjuster calls with the first offer.
The multiplier method
Most liability adjusters start with economic damages — your medical bills, projected future treatment, and documented lost wages. They then multiply that number by a severity factor (typically 1.5×–5×) to estimate general damages like pain and suffering. The sum is your gross claim value, which is then reduced by your share of comparative fault.
State fault rules change everything
In a pure comparative state (California, New York), you can recover damages even if you're 99% at fault — your award is just reduced by your percentage. In a modified comparative state (Texas, Illinois), you're barred from recovery once you're 51% or more at fault. In the handful of pure contributory states (Alabama, Maryland, Virginia, North Carolina, D.C.), any fault can bar your claim entirely.
Policy limits are the practical ceiling
The at-fault party's bodily-injury coverage limit is the most your claim can recover from their insurer — even if your calculated damages are higher. State minimums are often $25,000 or less, which a single ER visit can exhaust. This is why underinsured-motorist coverage on your own policy matters.
What you actually take home
The gross settlement number is not what you deposit. Attorney fees (typically 33–40% on contingency), medical liens, and case costs all come out first. Our Settlement Payout & Offer Compare calculator models the net recovery so you can evaluate whether an offer is fair.
When to hire an attorney
Claims under $5,000 with clear liability and resolved treatment may not need an attorney. Claims involving surgery, disputed liability, significant lost wages, or permanent injury almost always benefit from legal representation. Most personal injury attorneys offer free consultations and work on contingency (no fee unless you win).
Related calculators by situation
- Auto accidents: Car, motorcycle, truck, pedestrian, and dog bite claims
- Traffic violations: DUI and speeding ticket cost calculators
- Medical injury: Medical malpractice and nursing home neglect
- Workplace: Workers' comp and severance