Motor Accident Compensation: How The Multiplier Method Works

Motor accident compensation for death is calculated by taking the deceased's yearly income, adding a fixed percentage for future prospects, deducting a share for the deceased's own living expenses, and multiplying the balance by an age-based number called the multiplier. Then fixed conventional amounts are added on top.

If you are short on time, jump to the worked example below. It walks through every step with real numbers, so you can roughly check whether a Tribunal award is fair.

This method is not guesswork. The Supreme Court fixed it in Sarla Verma v. DTC (2009) 6 SCC 121 and refined it in National Insurance Co. v. Pranay Sethi (2017). On 6 November 2025, in Preetha Krishnan v. United India Insurance, 2025 INSC 1293, the Court again confirmed that Tribunals must follow one standard multiplier and cannot split it.

Suppose a salaried man aged 38 dies in a road accident. He earned ₹30,000 per month, so his yearly income is ₹3,60,000. He leaves a wife and two children.

Step 1: Add future prospects. He had a permanent job and was below 40, so 50% is added. ₹3,60,000 + 50% = ₹5,40,000.

Step 2: Deduct personal living expenses. With 2 to 3 dependants, one-third is deducted for what he would have spent on himself. ₹5,40,000 minus one-third = ₹3,60,000. This is the yearly loss of dependency.

Step 3: Apply the multiplier. At age 38 the multiplier is 15. ₹3,60,000 multiplied by 15 = ₹54,00,000.

Step 4: Add conventional heads. On top of loss of dependency, fixed amounts are added for loss of estate, loss of consortium, and funeral expenses. Under Pranay Sethi the base figures are ₹15,000, ₹40,000 and ₹15,000, and these rise by 10% every three years from 2017. So the actual amounts in your case will be higher than the base figures.

The bulk of the award here, about ₹54 lakh, comes from the dependency calculation. This is illustrative; your Tribunal will fix the exact income, dependants, and current conventional figures.

Future prospects reflect that the deceased would likely have earned more over time. Pranay Sethi fixed two sets of percentages.

For a deceased with a permanent or salaried job:

• Below 40 years: add 50%
• 40 to 50 years: add 30%
• 50 to 60 years: add 15%

For a deceased who was self-employed or on a fixed wage:

• Below 40 years: add 40%
• 40 to 50 years: add 25%
• 50 to 60 years: add 10%

The Court directed in conclusion (iii) that “An addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made.”

Sarla Verma fixed the multiplier by age band. These values are settled law and are reproduced below.

The deduction for personal expenses also follows a fixed scale. For a married deceased it is one-third where there are 2 to 3 dependants, one-fourth where there are 4 to 6, and one-fifth where there are more than 6. For a bachelor, normally 50% is deducted.

A “split multiplier” means using one multiplier for the years a person would have worked and a smaller one for the years after retirement. Insurers used this to cut awards, arguing that a person earns less or nothing after superannuation.

The Supreme Court rejected this on 6 November 2025 in Preetha Krishnan v. United India Insurance, 2025 INSC 1293. The Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra held: “Split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used by the Tribunal and/or Courts in calculation of the compensation.”

The Court treated retirement as a normal part of working life, not a reason to reduce compensation. It observed: “It is only a natural progression that a person who enters service must also exit at some point in time. The same cannot be taken as a negative circumstance against the deceased person.”

The practical effect: a Tribunal must apply the single multiplier for the deceased's age to the income as on the date of death. Superannuation is not a cogent reason to deviate. In Preetha Krishnan the Court enhanced the family's compensation to ₹47,76,794 with interest.

For the full filing procedure, see how to file a MACT petition for motor accident compensation. If your insurer has denied the claim, read what to do when a motor insurance claim is rejected. For a deeper guide to your rights, see The RTI Playbook.

It is the formula Indian courts use to value a death claim. You take the yearly income, add future prospects, deduct the deceased's personal expenses, and multiply by an age-based number. Fixed conventional amounts are then added. The Supreme Court settled it in Sarla Verma (2009) and Pranay Sethi (2017).

By the age of the deceased. The scale runs from 18 for ages 15 to 25, down by one unit every five years up to age 50, then down by two units every five years. So a 38-year-old gets multiplier 15 and a 52-year-old gets 11. The table above lists every band.

For a married deceased, one-third is deducted where there are 2 to 3 dependants, one-fourth for 4 to 6 dependants, and one-fifth for more than 6. For a bachelor, 50% is normally deducted. This share represents what the deceased would have spent on himself rather than the family.

A split multiplier uses one figure for working years and a lower one for post-retirement years, which shrinks the award. The Supreme Court banned it on 6 November 2025 in Preetha Krishnan v. United India Insurance, 2025 INSC 1293. Tribunals must now use one standard multiplier for the deceased's age.

No. The 2025 ruling held that superannuation is a natural progression of life, not an exceptional circumstance. The Court said retirement “cannot be taken as a negative circumstance against the deceased person.” The income as on the date of death is used with the single standard multiplier.

You can approach the Motor Accident Claims Tribunal in your district. A lawyer can prepare the petition and compute compensation using these settled figures. The editorial guidance on this page reflects work reviewed by Dr. Shrawan Kumar Pathak and the RTI Wiki team.

• National Insurance Co. v. Pranay Sethi (2017), Supreme Court of India
• Sarla Verma v. DTC (2009) 6 SCC 121, Supreme Court of India
• Preetha Krishnan v. United India Insurance, 2025 INSC 1293, decided 6 November 2025