How Do Insurers Value a Personal Injury Claim?

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In the US, over 700,000 personal injury claims are filed each year. The top sources of personal injury claims in the country are vehicle accidents, injuries in public spaces, work-related injuries, medical malpractice, and product liability problems.

Are you planning to submit an injury claim to insurance? Read on to learn how injury insurance claims are valued so you can get the highest offer possible.

Why Settle Instead of Going to Court?

Most claims for injuries do not go to trial. It is faster and less expensive to settle than it is to go to court.

That’s why insurance companies are willing to negotiate a settlement with people who make injury claims.

Before you can figure out your claim amount, you need to know what types of damages are compensated.

Payable Damages in Injury Insurance Claims

In the case of a personal injury claim, the liable insurance company must pay an injured person for the following:

  • medical expenses
  • lost wages (past, present, and future)
  • permanent physical disability or disfigurement
  • emotional damages, such as stress, anxiety, depression, or strains on family relationships
  • loss of family, social, and educational experiences, including missed school or training, vacation, or a special event
  • damaged property

An insurance adjuster will consider all these factors in order to decide upon a dollar amount to present as a settlement offer.

But how do they arrive at the settlement amount? We answer that below.

How is the Value of Personal Injury Claims Determined?

Calculating the economic damages during an injury claim is relatively straightforward. The insurance company will pay for a totaled car, the lost wages for the number of weeks or months you were unable to work, and the hospital bills.

But, it’s not easy to put a dollar amount on a person’s emotional damage or physical pain and suffering. These types of damages have no monetary worth.

Yet, insurance adjusters have to do just that every day. To help them with injury insurance claims, adjusters use one of two standard systems.

Per Diem System

The per diem system is simple. The insurance company will determine the value for each day that the victim suffered. They will multiply that number by the total number of days of suffering.

The tricky thing about the per diem system is that it’s hard to pinpoint when pain and suffering will end. Is it when the victim goes back to work? Or is it much later?

Also, it can be difficult to arrive at the daily dollar amount for injury claims.

Pain Multiplier System

In this system, an insurance adjuster multiplies the victim’s expenses (due to lost wages and medical bills) by any number between 1.5 and 5.

The insurance adjuster will choose a number on this scale based on the severity of the victim’s pain and suffering. The more severe a person’s non-economic losses, the higher the number.

The more invasive the medical treatment, the higher the multiplier. The same thing goes for the length of your recovery period and the severity and effects of your injury.

Keep in mind that with either system, the insurance policy will have a maximum payable amount. The insurer will not ever pay more than the stated maximum of a policy.

Percentage of Fault

There’s another factor that affects how much the insurance company is likely to pay. And that is the extent that the victim is at fault.

Again, there’s no exact science for calculating fault. Yet, in most claims insurance adjusters (and the victim) have a good idea of whether the victim was slightly, largely, or not at all to blame for the injury.

Let’s say that a pedestrian is injured by a car while crossing the road. The insurance company will look at whether the pedestrian was walking at a marked crosswalk and obeyed the pedestrian signals.

A pedestrian who was distracted, under the influence of a substance, or crossing the road unsafely would likely be held partly responsible for the injury. The insurance company may decide that the victim was 10% or 75% responsible for his or her injury.

The insurance adjuster will reduce the total settlement amount by that percentage depending on the victim’s comparative fault.

Now, the insurance adjuster has reached a settlement figure that the company will offer the victim.

The First Settlement Offer

Once the insurance adjuster has arrived at the settlement figure, he or she will offer you a percentage of that value.

They will never offer you their total calculated amount. And if you are an unrepresented plaintiff, you’ll usually get a very low first offer.

Most insurance companies have rules in place that force an adjuster to offer you a certain percentage of the value of the injury claim. Yet, different companies have different standards.

It’s important that you understand that adjusters have some wiggle room with their first settlement offer.

How to Get the Best Offer on Your Injury Claim

Don’t be discouraged by a low first settlement offer. You can often negotiate with the adjuster for a better offer.

The best way to get the best offer is to work with a personal injury lawyer.

A lawyer’s experience will allow him or her to determine if the settlement offer is fair. Then, they used their honed negotiating skills to get you the settlement you deserve.

Final Word

We hope this article has helped you get a better understanding of how an injury claim is valued.

Remember, if you were the victim of a personal injury accident, you deserve fair compensation.

Contact us for a free consultation with one of our experienced personal injury attorneys.

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