The average cost of fatal auto collisions almost doubled between 2005 and 2009 according to a cover story in USA Today published November 3, 2011. The story chronicles a report by the American Automobile Association (AAA) designed to push road safety to the national debate and includes statistics which purport to break down the cost per per person of this statistic.
While the article does not specifically deal with personal injury law suits arising from fatal car collisions, the subject needs to be addressed to put things in perspective.
In a very simple example, consider a 30 year old married father of two young children who is earned $100,000 annually as a sales executive immediately prior to his death. Assuming that he had a 35 year work life expectancy and a 3% rate of inflation on wages, let's compare how a declining interest rate environment affects the present value of just the lost earnings component of damages.
2005 $2,449,370.36
2009 $2,737,528.53
2011 $3,404,003.72
So a plaintiff lawyer with a similar set of facts, good liability and doing nothing different in 2005, 2009 and 2011 could conceivably obtain a higher value just by virtue of economic factors that neither he/she nor the plaintiff controls.
Note: The above numbers in the present value illustration were calculated using the 30 year United States Treasury on 11/1/2011, 11/3/2009 and an illustrative 5% rate for 2005. The long bond was not issued between 2002 and 2006. The 2002 rate was 5.43% and the 2006 rate was 4.91%. Source: Federal Reserve Board H-15 historical rates.
As someone who regularly works on settlement planning issues related to damages that arise from personal injury and fatal accidents, I wanted to give readers a possible explanation for factors that increase the cost of compensating for fatalities that rises above the notorious "McDonald's hot coffee" scenario. There are many factors that go into determination of damages.
That being said, increased road safety is an incredibly important issue and applaud AAA for adding to the national debate.
Leave a Reply