Personal injury settlements are an agreement between two parties (the injured person and the at-fault party). The calculations to determine how much a personal injury settlement should be is based on evidence, the legal strategy for the case, and the lawyer’s experience and understanding of what other cases with similar facts have settled for in the past.
This is different from a judgement, which is the other form compensation for personal injuries can take.
A judgement is an amount a court orders an at fault party to pay an injured victim of an accident after the case has been tried. Judgement awards can be risky, trials are expensive and may have an all or nothing result.
Deciding whether to take the risks associated with trial or agree to a settlement can be a complicated choice. This is why advice from experienced legal counsel can be invaluable to help you understand the risks and rewards and make the best decision. This blog post explores what factors are considered when calculating a personal injury settlement:
What Factors Impact Settlement Amounts
The most important principle to remember when trying to determine what settlement should be after an accident is often called ‘restitutio in integrum’, which means “restitution to the original position”. In plain English, the rule of thumb for a personal injury settlement is that it should be enough to return an injured person to how they were before the accident, and no more or less.
In practice this means that if a person has a pre-existing injury, the law will only compensate them to the extent an accident made an injury worse. A person who already walked with a limp will likely receive less for an injury that permanently affects their ability to walk than somebody who didn’t have a limp, even if they will both be unable to walk without crutches for the rest of their lives. On the other hand, if an injured person was a competitive athlete, they might receive more for an injury that affects their hand-eye coordination than a person who works in an office building.
The factors which affect a personal injury settlement are extensive and complex. The severity of an injury is the most important factor when calculating an injury settlement, but other factors can be extremely important.
Personal Injury Settlement Amounts and Insurance
At-fault parties are often represented through insurance companies that are aware that they are liable for the injuries suffered by victims of accidents. Insurance companies are usually willing to accept reasonable settlement offers to avoid expensive trials. An experienced personal injury lawyer can help you understand when to accept a reasonable offer or go to trial.
Fair compensation accounts for the disruption injuries cause to your everyday lives, goals, and aspirations. If a personal injury case goes to trial, a judge will make a binding determination of whether or not a party is truly at fault and has to pay compensation, as well as the amount the injured party is owed.
How much can you get out of pain and suffering?
The amount for each settlement varies depending on the unique circumstances of the case. So, while it’s not possible to say how much you can get out of pain and suffering without consulting with a personal injury lawyer, you can take steps to maximize your claim.
If a person doesn’t attend recommended treatments or do their best to recover, their award can be reduced. If a person contributed to an accident, or had a pre-existing injury or health condition, their settlement can also be reduced. If an injury will affect the victim’s ability to work, their current employment, level of education, and background can all impact a settlement amount.
Proper documentation can also have a significant impact on personal injury settlements. Undocumented or untreated losses or injuries are often very difficult to prove and may not be recognized by a judgment or a settlement. Personal traits can also be an important factor in determining a settlement. In a leading Supreme Court Case on personal injury awards, the Supreme Court stated that an amateur pianist should be compensated more for the loss of a finger than somebody who doesn’t partake in the hobby.
Types of Damages in Personal Injury Settlements:
According to the law, the goal of personal injury compensation is to return an injured victim to the status they would have been in ‘but-for’ the accident that injured them. Injury awards are often legally referred to as damages.
Damages can be described as the actual impact of an injury on a victim’s life. Damages account for the concrete impact of an injury and the important but intangible effects of an injury. Concrete impacts are often called ‘pecuniary’ or ‘economic’ damages, and cover things like wages lost from missed work, or out-of-pocket expenses for treatments. Intangible damages are often called ‘non-pecuniary’ or ‘non-economic’ damages, and account for things like the pain and suffering an injury causes to an accident victim.
There are three main types of damages in personal injury settlements and judgments, the first two types of damages are awarded or agreed to in almost every case, the third is exceptionally rare.
Economic Damages
Economic, or pecuniary damages reflect the actual and calculatable losses a person suffers as a result of their injury.
Pecuniary or economic damages reflect the quantifiable loss that somebody suffers because of an accident. These can include missed time at work, or costs already incurred to renovate a home for an injury. Sometimes, economic damages and non-economic damages blend. For example, if an injured person can’t do the same work they used to do, sometimes damages will be calculated as clearly quantifiable loss of future income. Other times, an award might reflect that someone is less competitive in the job market without reference experts reports and clear calculations.
Non-Economic Damages
Non-economic or non-pecuniary damages reflect losses that it is difficult and unpleasant to attach a dollar value to, but still need compensation. Things like being unable to eat your favourite food or unable to lift your children fall are non-economic damages.
Non-economic damages can include the pain and suffering a person suffers as a result of an injury, as well as other ‘hard to calculate’ damages. Non-pecuniary damages can account for an injured person’s loss of ability to keep their house clean, losing the amenities of life, disfigurement, or psychological harms. They might also account for the future costs a person might incur to care for their injuries. The point of non-economic damages for pain and suffering is to provide a person with ‘solace’ for the misfortune of their injury.
Punitive Damages
Finally, punitive, or aggravated damages are awarded when the at-fault party’s conduct is so bad that Courts feel that higher damages should be awarded to punish bad behaviour.
Evidence Impacts Calculating Settlements
In Canada, one of the most important principles of injury law is that the at-fault party is only responsible for the harm that they directly caused. As a result, evidence is extremely important in a personal injury case.
At the same time, damages, or settlements, are specific, and sometimes difficult to determine. This is because injury is a deeply personal experience and similar injuries can have vastly different impacts on two different people.
Two people involved in a terrible accident might have ongoing post traumatic stress disorder that impacts them for the rest of their lives. If one of them attends counselling, receives treatment, and has a record of the emotional impact of the accident on their lives, that person is more likely to convince a court that they have truly been impacted by their injuries. If the other person does not get treatment, not only are they less likely to recover, insurance companies and judges are more likely to question if they have been truly impacted if they haven’t sought treatment. Medical evidence is incredibly important, but it isn’t the only valuable evidence.
Pain Journals as Evidence in Personal Injury Claims
The Supreme Court has accepted the testimony of family and friends regarding the emotional impact of an accident or injury on a person. Witnesses can testify as to the changes in a person’s mood or personality after an injury. An injured person who keeps careful track of the impact of an injury on their life can seem far more credible. It is also important to keep track of improvement. When somebody can show that they took steps to recover, persevered, and improved, it shows that the ongoing impact of their injuries affect them despite their efforts. Attending appointments and taking doctors advice is integral to healing. It also creates credibility in the eyes of courts and insurance companies and their lawyers.
Tracking Expenses & Lost Earnings
When it comes to monetary losses, receipts, pay stubs, records of sick leave, and other proof of loss is incredibly important. No matter how much work an injured person has lost, or the costs they’ve incurred in recovery, insurance companies are not likely to simply take an injured person’s word for it. The more clearly that an injured person can show what the cost of their injury was, the easier it is to come to an agreement on that cost or sway a judge.
It is important to think carefully about the many ways in which an injury actively costs a person money. For example, if an injured person must hire a housekeeper to do chores they were previously capable of doing, this is an injury related expense. Injury is mentally taxing, and often injured people are grieving their loss, experiencing pain, and coping with major disruptions to their life.
Personal Injury Lawyers can support injured people in ensuring that they are compensated for every aspect of their loss, but injured people should reach out to their communities and loved ones for support. Having a trusted person help keep track of receipts and organizing records can be immensely helpful to an injured person who is focusing on their own recovery.
The Process of Calculating a Settlement
The process of calculating a settlement usually takes a few years. This is because it is difficult to assess the long-term impact of an injury while it is still being treated and stabilizing. Since the purpose of the settlement is to compensate the injured person for the total impact of the injury, it’s important that the person seek treatment and find out what life looks like after the injury before agreeing to a monetary amount. Otherwise, it’s possible that the compensation will be too low to fairly compensate for the long-term impacts.
Gathering medical and other evidence
Once an injury has stabilized, personal injury lawyers often send their clients to medical experts. Medical experts provide independent reports which summarize and assess the condition of the injured person and the everyday impact of the injury on the person’s life. Sometimes, in complicated situations, economists can help to understand economic losses when a person loses their ability to work or do a job they trained to do. Once an injury lawyer has expert reports and documents that show their clients loss of income and expenses, they often consult prior injury cases and try to find what was awarded to plaintiffs in similar circumstances. These provide a guideline for what kinds of settlements a personal injury client can expect.
Some examples of personal injury claims we have settled include:
- 1.2 million for a wrongful death caused by a drunk driver.
- 2.7 million for a spinal cord injury for a pedestrian who was hit by a pickup truck.
- 6.4 million for a pediatric brain injury.
Determining liability for the personal injury
The next step in the calculation of a personal injury settlement is liability. This is an important step because an injured person’s settlement is reduced if their decisions or actions contributed to the accident. The settlement amount is usually reduced by the percentage of the accident or the injury for which the injured party is responsible.
For example, if an accident occurs on a snowy road, and neither driver could see the lane lines, and they hit each other while neither can tell where the correct lane was, they may both be 50% at fault. This means that an injured person’s settlement or judgement in this scenario would be reduced by 50%. In another situation, where an injured person is 25% responsible for the injury (which is the amount usually applied to people not wearing their seatbelts in a car accident), they would receive 75% of their settlement amount.
Caps for personal injury settlements
Another step is to check for any legal caps or other reductions and adjustments. Both previous cases and legislation ‘cap’ some damages. Caps change over time, in 2025, minor injuries, like whiplash without lasting effects or chronic pain, are capped in Alberta at $6,182.00.
How is pain and suffering calculated?
Damages for pain and suffering are capped at about $428,000.00. Only the most extreme cases reach the pain and suffering cap. Some aspects of loss income are subject to tax reductions. In some cases, damages for costs of future care, or loss of income are indexed to inflation or increased or reduced to account for possible future events.
When to Consult a Personal Injury Lawyer
If you have been in an accident and are injured, contact a personal injury lawyer. Settlements and awards are complicated. It can be difficult to understand how much compensation you are truly entitled to. A personal injury lawyer is familiar with the common awards that have been granted in Canada, the process of negotiating a settlement and proving your injury, and how to advance a personal injury case through court processes.
A Personal Injury Lawyer can provide you with advice on good record keeping, help to arrange appropriate treatment and assessment, and support you in getting a reward that actually reflects the impact an injury has on your life. While a personal injury lawyer can never truly give back what is taken by an injury, settlements can be an important step in recovering from injury. Settlements can help provide closure, help injured people deal with the financial losses they experience as a result of their impairments and support future costs of care. Recovery is the true goal when a person is injured. Settlements can help provide injured people with the resources they need to pursue their recovery.
