In plain words: motor-accident compensation is not a guess or a round figure. For death and serious-injury claims the Supreme Court set a formula — the 'multiplier method' — and knowing it tells you roughly what a claim is worth and whether an offer is fair.
The building blocks
The method, settled in Sarla Verma v. DTC and standardised by the Constitution Bench in National Insurance Co. v. Pranay Sethi (2017), has four moving parts: the deceased's income, an addition for future prospects, a deduction for personal expenses, and an age-based multiplier.
Step 1 — Establish income
Take the actual monthly/annual income, proved by salary slips, income-tax returns or, for the self-employed, business records. Where income cannot be proved, the Tribunal fixes a reasonable notional income.
Step 2 — Add future prospects
Earnings usually rise over a career, so a percentage is added:
- Permanent/salaried job: add 50% (age below 40), 30% (40–50), 15% (50–60).
- Self-employed or fixed wages: add 40% (below 40), 25% (40–50), 10% (50–60).
Step 3 — Deduct personal expenses
The deceased would have spent part of the income on themselves, so a share is deducted based on the number of dependants: 1/3 for 2–3 dependants, 1/4 for 4–6, and 1/5 for more than 6. For a bachelor, roughly 50% is deducted.
Step 4 — Apply the multiplier
The remaining yearly figure is multiplied by an age-based multiplier — for example 18 (age 15–25), 17 (26–30), 16 (31–35), 15 (36–40), 14 (41–45), down to 5 for the oldest brackets. Younger victims get a higher multiplier because more earning years are lost.
Step 5 — Add the conventional heads
On top of the calculated 'loss of dependency', fixed sums are added for loss of estate, loss of consortium and funeral expenses. These base figures are periodically enhanced by the courts.
A worked example
Say a salaried person aged 35 earned ₹6,00,000 a year, leaving a spouse and two children (three dependants). Add 50% future prospects → ₹9,00,000. Deduct 1/3 for personal expenses → ₹6,00,000. Apply the multiplier 16 → ₹96,00,000 loss of dependency, plus the conventional heads and interest. Change the age, income or dependants and the figure moves accordingly.
Frequently asked questions
Does the multiplier method apply to injury claims too? For loss of future earning in serious injury cases, a similar logic applies to the loss of earning capacity; the exact heads differ.
Can I challenge a low award? Yes — if the Tribunal used the wrong income, multiplier or missed heads, the award can be appealed.
Is interest added? Yes — Tribunals usually award interest from the date of the claim petition.
How Vakil Help Desk helps
Vakil Help Desk computes your claim the way the Tribunal does — income, future prospects, the right multiplier and the conventional heads — so nothing you are owed is left on the table. If your family has suffered a road accident, we can calculate and claim your full, correct compensation.
This article is for general legal awareness, not individual legal advice. Compensation depends on the facts, the evidence and the law as applied by the Tribunal, and figures are revised over time. Please consult a lawyer before acting.