How to Value a Personal Injury Claim in an Alternative Dispute Resolution Approach

How to Value a Personal Injury Claim in an Alternative Dispute Resolution Approach

Personal injury cases are the most commonly seen examples of civil law which result from, among other things, car accidents, slip and fall accidents, product liability, medical malpractice and dog bites. 

The purpose of personal injury law is to provide financial compensation to victims of wrongful action.  The monetary compensation which a victim seeks is considered a personal injury claim.

There are different methods of calculating the value of a personal injury claim.  In most cases, pursuing compensation for personal injury claims means dealing with insurance companies.  

In insurance, the term “damages” describes losses suffered from personal injury.  In general, there are two types of damages:  special or economic and general non-economic damages. 

Special economic damages refer to measurable amounts of money an injured person lost and will continue to lose in the future, such as past and future medical bills, medication, transportation costs, replacement costs, and past and future lost wages. 

On the other hand, general non-economic damages include intangible losses personal injury victims suffered and will continue to suffer in the future.  Pain and suffering, emotional distress, anxiety and depression, persistent sleep loss and loss of consortium are the most common general/non-economic damages. 

“Calculating” Economic and Non-Economic Damages

Special/economic damages are relatively easy to calculate.  The total sum of medical bills, medication receipts and lost wages make up a foundation of special/economic damages in a personal injury claim.  You prove your personal injury special/economic damages claim by collecting and presenting the medical bills for all health services you received due to injury suffered because of another’s wrongful acts together with proof of any wages you lost as a result of those acts. 

General/non-economic damages are much more difficult to prove.  They relate to intangible losses and each personal injury is different.  That is why there is no “one-size-fits-all” formula for calculating these general/non-economic damages. 

In order to estimate general/non-economic damages, there is a general guideline of multiplying the total amount of special damages by one to three.  That is usually considered a reasonable estimate of an injured person’s pain and suffering.      

Oftentimes, the above-described guideline does not reflect all dimensions of suffering caused by others’ wrongful acts.  That is particularly true in cases involving extreme mental anguish, persistent pain and permanent injuries (involving invasive surgeries, amputations or paralysis), as well as shocking events (shootings, plane crashes, etc.). 

The insurance companies often use personal injury calculators – software designed to calculate settlement amounts using algorithms.  These calculators use statistical data on average settlement amounts for similar injuries and “measure” the intensity of an individual’s pain and suffering.

Proving a Personal Injury Claim

Initially, you must convince the insurance company that their insured (i) owed you a duty of care, and (ii) breached that duty of care.  Furthermore, you have to prove that their insured’s negligence was the cause of personal injuries you suffered. 

Understandably, you must corroborate every personal injury claim by photographs, witness statements, medical records and bills as well as other supporting evidence. 

Mediating Personal Injury Claims

Personal injury mediation is a mutually beneficial method of settling personal injury claims.  Unlike litigation, which often takes years, mediation enables the parties to resolve their conflict in a relatively short period of time. 

In mediation, the parties present their claims and defenses to a neutral third person called the mediator.  The mediator is chosen voluntarily by the parties and is usually a retired judge, attorney, or another professional with expertise in personal injury claims. 

Confidentiality sets mediation apart from a court trial.  All personal injury claims-related information remains behind closed doors and nothing discussed with the mediator becomes a part of any public record. 

The mediator generally conducts a joint session and then a session with each side separately.  During private sessions (called caucuses), each party presents their positions regarding claims and defenses enabling the mediator to assist in facilitating the possibility of settling. 

In joint sessions, the negotiation aspect of mediation becomes fully visible.  The insurance company representative and the injured party attempt to negotiate a settlement amount.  The mediator facilitates the negotiations.  The principal purpose of mediation sessions is to find common understanding that leads to an agreement.  If a settlement agreement is signed, it is legally binding for both parties.   

Resolving Personal Injury Claims Through Arbitration

Arbitration has many similarities to traditional litigation.  Unlike a court trial, however, there is no judge or jury in arbitration.  An arbitrator or panel of arbitrators decide the personal injury dispute – the arbitrator(s) are generally former judges or experienced attorneys. 

Contrary to mediation, the arbitrator(s) do(es) not facilitate negotiations.  The arbitrator(s) issue(s) a decision which is either (i) binding (final), or (ii) non-binding.  A binding arbitration decision is generally mandatory and enforceable in the same way as court judgments/jury verdicts.   A non-binding arbitration decision can generally be avoided by one of the parties demanding a “trial de novo” within a short period of time after the non-binding arbitration decision is received by the parties.  If a trial de novo is demanded by any of the parties, the dispute/case is then usually set for a court trial. 

Because arbitrators generally operate under more relaxed rules of evidence, arbitration is less formal than a court trial.  Oftentimes, evidence is presented in summary form by the parties’ attorneys – rather than through live testimony of witnesses and experts, etc. – in what generally makes a personal injury arbitration a more time-saving and cost effective procedure compared to a trial.


As informal, confidential and cost-effective methods, mediation and arbitration are excellent procedures for personal injury dispute resolution.  Both the insurance companies and insured individuals are much more likely (and oftentimes required by the courts) to use alternative dispute resolution before resorting to a time-consuming and costly jury trial.