How is compensation calculated?
Last updated · By Mustafa Bilgic
The two building blocks of every claim
People searching for "how is compensation calculated" usually expect a single formula. There isn't one — but there is a clear structure. Almost every personal-injury payout, on both sides of the Atlantic, is built from two components. Once you understand them you can sense-check any number an insurer, solicitor or calculator gives you.
1. General damages — the injury itself
General damages compensate you for the pain, suffering and loss of amenity (PSLA) caused by the injury — the human cost, not the money cost. In England and Wales these are valued from the Judicial College Guidelines (JCG), the standard reference that judges and solicitors use to place each injury and severity into a bracket. A medical report sets the diagnosis, severity and prognosis, and the figure moves within the bracket according to how long symptoms last and how much they affect your daily life and work.
2. Special damages — your financial losses
Special damages reimburse the actual money you lost because of the injury, and they must be proven with evidence — payslips, receipts, invoices and medical bills. They cover lost earnings, treatment and rehabilitation, care and assistance, travel to appointments, and any other out-of-pocket costs. Serious injuries also include future losses such as ongoing care or reduced earning capacity. Our guide on general vs special damages breaks the two down in detail.
How the figure moves within a bracket
The JCG does not give one number per injury — it gives a range. Where you sit inside that range is driven by a handful of factors:
- Severity — how serious the injury is at its worst.
- Duration — how long symptoms last, and whether full recovery is expected.
- Treatment — whether surgery, injections or long-term therapy were needed.
- Loss of amenity — the effect on work, hobbies, sleep and daily activities.
- Permanent effects — scarring, ongoing pain, or any lasting disability.
Two people with the "same" injury can therefore receive very different general damages: a wrist fracture that heals in three months sits near the bottom of its bracket, while one that leaves permanent stiffness and ends a manual career sits near the top.
The UK whiplash tariff — a special case
Road-traffic whiplash is the big exception to the JCG. For accidents in England & Wales on or after 31 May 2025, whiplash and minor psychological injuries lasting up to two years are paid under a fixed statutory tariff set by the Ministry of Justice, not the JCG. Small claims of this kind are handled through the government's Official Injury Claim portal. The tariff bands are:
| Duration of symptoms | Tariff (£) | With minor psychological injury (£) |
|---|---|---|
| Up to 3 months | 275 | 315 |
| 3–6 months | 565 | 650 |
| 6–9 months | 965 | 1,100 |
| 9–12 months | 1,510 | 1,705 |
| 12–15 months | 2,335 | 2,625 |
| 15–18 months | 3,100 | 3,500 |
| 18–24 months | 4,215 | 4,830 |
Whiplash lasting more than two years falls outside the tariff and is valued under the JCG, usually for more. See the whiplash tariff explained.
How it works in the US
The US has no national compensation table. Pain-and-suffering (general) damages are negotiated, and the figure varies widely by state, by the insurer, and by whether the case settles or goes to trial. Two common approaches are used as a starting point:
- The multiplier method — general damages are estimated as a multiple of your medical bills (special damages), typically around 1.5× to 5×, with the higher multipliers reserved for serious, permanent or clearly liable injuries.
- The per-diem method — a daily dollar figure is assigned to your suffering and multiplied by the number of days affected.
A worked example
Imagine a UK road-traffic claim with a moderate back injury that has not fully recovered after 18 months, plus documented financial losses. Here is how the total is assembled:
| Component | Amount (£) |
|---|---|
| General damages — moderate back injury (JCG bracket) | 20,000 |
| Special damages — lost earnings (net, to date) | 6,500 |
| Special damages — physiotherapy & medical costs | 1,200 |
| Special damages — travel & care | 800 |
| Future losses — ongoing treatment | 2,500 |
| Estimated total | 31,000 |
If the claimant were found 25% at fault for the accident, the total would be reduced by a quarter for contributory negligence, to roughly £23,250. This is exactly the structure the free compensation calculator follows: it places the injury in a bracket, adds your losses, and shows the indicative range.
Summary of the components
| Component | What it covers | How it is valued |
|---|---|---|
| General damages | Pain, suffering & loss of amenity | JCG bracket (UK) / multiplier or per-diem (US) |
| Whiplash (UK, ≤2 yrs) | Road-traffic neck/back soft-tissue | Fixed statutory tariff £275–£4,830 |
| Special damages — past | Lost earnings, treatment, travel, care | Proven actual cost with evidence |
| Special damages — future | Ongoing care, future loss of earnings | Multiplier × multiplicand (Ogden tables, UK) |
For a deeper dive on the financial side, read how to claim loss of earnings, and to understand fee arrangements see no win no fee explained. Remember that strict time limits apply — generally three years in England & Wales.
Frequently asked questions
How is compensation calculated?
Compensation is calculated by adding two components: general damages for the injury itself (pain, suffering and loss of amenity) and special damages for your financial losses. In England & Wales general damages come from the Judicial College Guidelines, except minor whiplash up to two years, which uses a fixed tariff of £275–£4,830. Special damages are your proven losses — earnings, treatment, care, travel and future costs. The total is the injury value plus the losses, adjusted for any fault on your part.
What are general and special damages?
General damages compensate for non-financial harm — pain, suffering and loss of amenity — estimated from injury brackets such as the JCG. Special damages are your measurable financial losses, proven with payslips, receipts and invoices, and include lost earnings, medical and care costs, travel and future losses. Together they make up your compensatory damages. See general vs special damages.
How do they value pain and suffering?
In England & Wales pain and suffering are valued from the Judicial College Guidelines, which give a bracket for each injury and severity. A medical report sets the diagnosis, severity and prognosis, and the figure moves up or down within the bracket based on how serious the injury is, how long symptoms last, and the effect on daily life and work. There is no fixed formula; comparable past cases guide the figure.
What is the whiplash tariff?
The whiplash tariff is a fixed table of compensation set by the UK government for road-traffic whiplash lasting up to two years, for accidents on or after 31 May 2025 in England & Wales. It runs from £275 (under three months) to £4,830 (18–24 months), with a small uplift where there is also a minor psychological injury. Whiplash lasting more than two years is valued outside the tariff under the JCG.
Is a compensation calculator accurate?
A compensation calculator gives a realistic indicative range, not a guaranteed figure. It applies published injury brackets and the statutory whiplash tariff to the injury and losses you enter. The actual award depends on full medical evidence, who was at fault, and your exact documented losses, so always confirm a precise valuation with a qualified solicitor (UK) or attorney (US).