Injury Compensation Calculation

Compensation = Heads of Damages – Deductions

Heads of Damages – Personal injury compensation aims to restore the injured person back into the position they would have been in if the injury did not happen. Since it is often not possible to completely restore a person’s health, financial compensation in the form of “Damages” is used instead to allow the injured person to live their life in a way that is as close as possible to the way they would be living if not for their injures. In this context, “Heads of Damages” refers to the different categories of damages that has been historically recognized by the Courts.

Deductions – These are potential issues with the injured person’s claim that the insurance company and their representatives will point to in their efforts to lower the value of the claim. Some of these deductions can be justified, while others can be avoided. A lawyer experienced in insurance matters will be invaluable in helping the injured party successfully navigate many of the deductions that the insurance company will raise over the course of the claim.

Head of Damage #1 – Pain & Suffering

The “Pain & Suffering” head of damage is intended to compensate the victim for the physical harm and emotional distress caused by their injuries. It is typically the largest portion of the final settlement or judgement. Where the injured person will fall within the range of compensation outlined below will depend on the nature of the injured person’s injuries and how these injuries had affected their lives and comparing it to other cases that have come before a Court in Canada.

Range of Compensation for Pain & Suffering:

  • Minimum – $0.00 lower limit for no documented injuries.
  • Minor Injury Regulation Limit – $6,061.00 upper limit for soft tissue injuries that did not seriously affect the injured person’s quality of life.
  • Maximum – $448,587.57 (inflation adjusted to Spring, 2024) upper limit for catastrophic mobility injuries such as quadriplegia or serious mental impairments such as severe brain damage.

Head of Damage #2 – Future Cost of Care

The “Future Cost of Care” head of damage is intended to compensate the injured person for their medical and rehabilitation needs from the time of settlement or judgement onwards into the future. Personal injury cases can be complex, and the calculation of Future Cost of Care can vary widely depending on the circumstances of the case. It often requires the expertise of legal professionals to arrive at an accurate estimate.

Types of Future Cost of Care:

  • Specific Future Cost of Care – Medical, occupational, and financial professionals may produce expert reports where they specify the cost of treatment the injured person will incur in the future.
  • Estimated Future Cost of Care – Where experts assessments are not available, an estimated future cost of care may be reached by calculating a reasonable amount of treatment and other foreseeable expenses the injured person will likely incur in the future due to their remaining injuries.

Head of Damage #3 – Past Loss of Income

The “Past Loss of Income” head of damage is intended to compensate the injured person for financial losses they suffered due to their injuries starting from the time of the injury itself until the claim’s resolution through settlement or judgement. The injured person will typically required to establish their pre-injury income, work history, the extent of their injuries, and the effect these injuries have had on the performance of their work.

Examples of Past Loss of Income:

  • Loss of wages.
  • Loss of salary.
  • Loss of bonus.
  • Loss of promotion.
  • Loss of business revenue.
  • Loss of any other form of income the victim would have earned if not for their injury.

Head of Damage #4 – Future Loss of Earning Opportunity

The “Future Loss of Earning Opportunity” head of damage is intended to compensate the injured person for the reduction in their ability to earn income from the time of their claim’s resolution via settlement or judgement into the future. The law recognizes that some injuries may not result in an immediate loss of income but can nonetheless have ongoing and often life-altering consequences that affect a person’s long-term ability to work and earn a living.

Examples of Future Loss of Earning Opportunity:

  • Reduced ability to work.
  • Diminished career prospects.
  • Forced career changes.
  • Inability to work in one’s chosen field.
  • Negative impacts on school performance.
  • Extended leave of absence in a professional or competitive field.

Head of Damage #5 – Housekeeping Expenses: Past & Future

The “Housekeeping Expenses” head of damage is intended to compensate the injured person for costs associated with maintaining a household. The law recognizes that the injured person’s loss of housekeeping ability form part of the financial losses. Within this head of damage, ‘Past’ and ‘Future’ refers to the amount of housekeeping loss the injured person suffered from the date of their injury to the date of their claim’s resolution via settlement or trial, and from the date of resolution via settlement or trial into the future, respectively.

Examples of Housekeeping Expenses:

  • Cleaning & laundry.
  • Repair & maintenance.
  • Grocery shopping and cooking.
  • Running household errands.
  • Childcare.
  • Yard work and snow shovelling.

Head of Damage #6 – Out of Pocket Expenses

The “Out of Pocket Expenses” head of damage is intended to compensate the injured person for the specific and quantifiable financial losses or expenses incurred by the injured person as a result of another person’s negligence. To recover out of pocket expenses, the injured person will typically need to produce evidence of the expenses, typically in the form of receipts or invoices.

Examples of Out of Pocket Expenses:

  • Transportation & travel costs.
  • Fuel costs.
  • Loss of vehicle value.
  • Insurance deductibles.
  • Unreimbursed property damage & repair costs.
  • Unreimbursed equipment & home modification costs.
  • Unreimbursed medical treatment & medication costs.

Head of Damage #7 – Pre-Judgement Interest

“Pre-Judgement Interest” refers to the interest that starts to accrue on the total of the ultimate award for damages starting from the date the injured person was injured until the date of judgement or settlement.

The law recognizes that a lawsuits can take a significant amount of time to reach resolution, and therefore, to promote fairness, the Pre-Judgement Interest head of damage is designed to compensate the victim for the time they have had to wait for their legal claims to be resolved and to encourage the prompt resolution of legal claims.

The method with which Pre-Judgment Interest is calculated can be complex and subject to many specific rules and exceptions. Therefore, it is important to consult with a legal professional to understand how Pre-Judgement Interest is calculated and applied to your specific case.

Deduction #1 – Causation Apportionment

Causation issues arise when the legal responsibility or accountability of the defendant is called into question as to whether they are liable for the injured person’s injuries, and if so, to what extent they are liable. If causation issues are raised by the defendant and cannot be resolved in the injured person’s favour, the injured person’s final compensation may be reduced proportionally according to level of responsibility the defendant shoulders.

Types of Causation Apportionment:

  • Contributory Negligence – If the injured person’s actions contributed to causing the accident according to the road rules, then their final settlement or judgement will be reduced in proportion to their degree of responsibility in causing the accident.
  • Pre-existing Injuries – If the injured person has a history of medical conditions dating to before their accident, then the degree to which these medical conditions were aggravated will be calculated on the degree of aggravation instead of newly acquired injured.
  • Post-accident Injuries – If, in the time between their accident and settlement or judgement, the injured person suffered unrelated injuries of a similar nature to the injuries they suffered in the accident, these injuries will be calculated on a discounted basis.

Deduction #2 – Failure to Mitigate Damages

The injured person who suffered due to the negligence of another person has the legal duty to make reasonable efforts to reduce their damages. This legal principal is based on the idea that the injured person should not be allowed to do nothing and let their situation worsen to recover more in damages. If the victim fails to fulfil this duty, their ability to recover damages through settlement or judgement will be proportionally reduced.

Types of Failures of Duty to Mitigate Damages:

  • Failure of Duty to Mitigate Injuries – The injured person has the duty to seek timely and regular medical treatment after their injuries in order to prevent their injuries from deteriorating. Furthermore, the injured person should take reasonable care to avoid exacerbating their injuries after their accident by following the advice of their medical professionals.
  • Failure of Duty to Mitigate Financial Losses – The injured person has the duty to take reasonable steps to minimize their financial hardships after their accident. This may include starting modified duties at work, seeking alternative employment, undergo retraining in a career that will be more suitable for their physical limitations, applying for accommodations at educational institutions, and applying for disability benefits among others.

Deduction #3 – Settlement Discount

In Alberta, well over 90% of all personal injury claims are resolved through a negotiated settlement. The amount offered by the defendant’s insurance company for settlement will typically be lower than what can be obtained through obtaining a judgment through trial. This difference is referred to as the Settlement Discount.

Types of Settlement Discounts:

  • Early Resolution – The average time it took to go to trial in the Alberta Court of King’s Bench for the 10 most recent motor vehicle accident personal injury cases is 9 years and 7 months. A negotiated settlement, on the other hand, can be reached at any time. This large reduction in time from judgement to settlement is taken into account when reaching a final settlement figure due to the time value of money.
  • Litigation risk – resolving a claim through a negotiated settlement provides all parties involved with greater control and predictability over the outcome than obtaining a favourable judgement at trial where the final decision-making power resides with the judge. The settlement offered by the defendant will be discounted in proportion to the perceived strengths and weaknesses of the injured person’s case on the understanding that these perceived strengths and weaknesses will be realized if the matter were to be resolved at trial.

Sample Settlement Calculations