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Tuesday, February 20, 2018
Article written by Carolyn Clayton

Example of Compensation Calculations

There are hundreds of thousands of insurance claims and employee worker’s compensation claims processed each year in the UK. For some types of claims, such as damage to property claims, there are simple ways to determine the amount of compensation that the claimant should receive. In other cases, such as pain and suffering claims and claims where the injured party may have partially at fault, it can be more difficult to determine precisely how much compensation the claimant is entitled to.

Claims for which a specific monetary figure for reimbursement can easily be established generally require very little in the way of compensation calculations. One example of this is claims where there is damage to actual physical property, in which case the compensation is equal to the value of the item damaged or destroyed. In most cases, the claimant is awarded replacement value rather than actual value, meaning that if a three year old computer was destroyed, the claimant will receive monetary reimbursement which is enough to allow for the purchase of a new computer of a similar model, rather than the actual value of the destroyed computer. Awarding replacement value of the damaged item is a more fair method of compensation than actual value compensation, as it allows the claimant to essentially recover use of the damaged or destroyed items. In some instances, common injuries can be assigned a fairly standard compensation value. For example, hernia injuries are typically paid from £2,000 to £14,000, and whiplash injuries from £750 to £2,550. Another example of a more concrete loss for which compensation is easy to calculate is wage losses, although this category can get a little more complicated than straight property loss as possible future benefits, bonuses, and raises need to be calculated as well. In almost all instances, and particularly where past as opposed to future losses are concerned, judges will add interest to the monetary compensation that is awarded.

Unfortunately, the vast majority of claims which are lodged in the UK feature damages which are extremely difficult to put a concrete figure on. This may be because the claim is for something which is hard to define or which does not have a concrete value, such as ‘pain and suffering’. It may also be difficult to determine the amount of compensation awarded for a particular claim because there are so many different factors involved in each individual case. There are some calculators on the internet which attempt to put a specific figure on a claim, but there are so many variables that it can be hard to get much more than a ballpark estimate from these calculators. Even when there are standard amounts and ranges of compensation for common injuries, the amounts can vary widely depending upon circumstances. For example, the standard compensation range for knee injuries ranges from £8,150 to £56,000, and for head or brain injuries the compensation can range from £1,300 to £165,500. Much of the time, compensation calculations are made independently by the judge who is hearing the claim. If the claim is settled out of court, then the compensation calculations are generally carried out and then negotiated and agreed upon by the lawyers from both sides of the process. In either instance, the judge or lawyers determine compensation based on an estimate of the claimant’s costs, including medical bills, lost wages, lifestyle changes, and any other costs incurred. If it is determined, or the claimant admits, that the injured party was partially responsible for the damage or injury, their responsibility is considered as a percentage and the compensation awarded is reduced by that amount. To this number is added a reasonable amount for pain and suffering or other emotional distress. Both lawyers and judges arrive at these amounts based on prior experience and their knowledge of the details of the case, so if at all possible claimants should make certain that their representation is experienced in the specific type of claim being pursued. In this way, the claimant can ensure that he or she is getting the fairest possible compensation for the injury that he or she has suffered.
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