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How Insurers Value a Personal Injury Claim

On Behalf of | Nov 22, 2013 | Blog, personal injury

Personal Injury Claim

Have you ever wondered how insurers determine how much your injury is “worth”? Although insurance settlements can seem arbitrary at times (especially when unquantifiable damages are involved), there is a rough formula that insurance adjusters follow to arrive at a final settlement.

Insurance’s Claim Liability

To start, there are specific damages that the liable party’s insurance company is responsible for covering. If you have been injured, you may be compensated for the following:

  • Any relevant medical care or related expenses

  • Lost income as a result of the accident

  • Permanent disability

  • Lost family, social or educational experiences, such as missing school

  • Emotional damages, such as stress, depression or anxiety

  • Property damage

Qualifying for Claims

Hospital bills are one thing, but how do you quantify emotional suffering? While there is no exact formula, insurance adjusters use a fairly simple technique to come up with a starting point for negotiations: multipliers. First, the insurance adjuster adds up all of the concrete medical expenses, which are known as “medical special damages.” Next, the adjuster assigns a multiplier based on the severity of the injuries. (A multiplier for something relatively minor might be a 1.5; injuries with long-lasting effects could merit a 5.) The adjusted number (medical damages x severity multiplier) incorporates the non-monetary losses suffered by the injured party. The insurance company arrives at a final number when lost wages are added to the adjusted sum.

It’s important to remember that the adjusted number is just a starting point for further negotiations. Ultimately, the extent to which each party is at fault will determine how your claim is compensated. For instance, if your damages were assessed to be $50,000 and the insurance company determines that you are 20% at fault, your final damages figure will be $40,000. Again, the above formula is not a hard and fast rule. If you’re unsure whether or not the adjuster’s settlement is fair, contact an experienced personal injury attorney.