Anyone who sustains injuries in an accident almost always wonders: how is personal injury compensation calculated? The short answer is: carefully, personally, and often more complex than you might think. In this article we explain step by step how personal injury compensation is determined, which types of damage count, and why professional guidance is important.

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What exactly is personal injury compensation?

Personal injury compensation is all losses that arise because someone suffers physical or psychological injury caused by another party. It involves not only medical expenses, but also loss of income, missed opportunities, and non-material damage (pain and suffering).

Important: the starting point is always that the victim is put financially in the position as if the accident had not happened.

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Step 1: Establishing liability

Before damages can be calculated, it must be established who is liable. Without liability no compensation.

Liability can for example arise in:

• traffic accidents

• workplace accidents

• medical errors

• accidents in public spaces

Only after liability has been acknowledged (or legally established) can the calculation of damages begin.

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Step 2: Inventory of all heads of damage

Personal injury damages consist of multiple heads of damage, which together make up the total amount of compensation. These are roughly divided into material damage and non-material damage.

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Material damage (pecuniary loss)

1. Medical expenses

All costs that are not (fully) reimbursed, such as:

• deductible

• physiotherapy

• medication

• assistive devices

Future medical expenses also count.

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2. Loss of income

One of the largest items of damage.

Think of:

• lost wages

• being able to work fewer hours

• loss of career opportunities

• loss of earning capacity for the self-employed

The following are considered:

• income before the accident

• current situation

• future outlook without the accident

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3. Costs for help and care

For example:

• household help

• informal care by family

• childcare

• modifications to the home or car

Also free help from family is legally recognized.

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4. Other costs

Such as:

• travel expenses

• study delay

• additional expenses due to the injury

Anything that can be proven to be the result of the accident counts.

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Non-material damage: pain and suffering compensation

In addition to financial damage, there is pain and suffering compensation. This is compensation for:

• pain

• grief

• loss of enjoyment of life

• psychological issues

How is pain and suffering compensation determined?

Pain and suffering compensation is determined based on:

• severity and duration of the injury

• permanent impairments

• impact on daily life

• similar previous cases

There is no fixed formula. It is case-by-case.

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Step 3: Medical assessment

For permanent or long-term injuries, a medical end state is required. Only then can it be properly assessed:

• what the permanent limitations are

• what future damages can be expected

Without medical clarity there is a risk of underestimation of the damages.

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Step 4: Calculating future damages

Personal injury often extends beyond today. The following are considered:

• future loss of income

• future care costs

• loss of pension accrual

This is done using calculation models and scenarios. Small assumptions can have major financial consequences.

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Step 5: Negotiations with the insurer

The insurer of the liable party will:

• critically assess the damage items

• try to limit the amounts

• sometimes exert pressure to settle quickly

This is precisely where expert legal guidance makes the difference.

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Common mistakes when calculating personal injury compensation

❌ Accepting a settlement too quickly
❌ Underestimating future damages
❌ Not accounting for career loss
❌ Not waiting for maximum medical improvement

Once signed, an agreement is almost always final.

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Why a personal injury lawyer is important

A specialized personal injury lawyer:

• brings fully mapping all damage items

• engages medical and financial experts if needed

• negotiates with insurers

• prevents underestimation of your damages

The costs of legal assistance in personal injury cases are recovered from the liable party. For you, this is therefore free of charge.

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Conclusion: how is personal injury compensation calculated?

Personal injury compensation is calculated by:

1. determination of liability

2. inventory of all damage items

3. medical assessment

4. calculation of future damages

5. legal negotiation

Every case is bespoke. Two seemingly similar accidents can result in completely different compensation amounts.