How Do Insurers Value an Injury Claim? A Comprehensive Guide
Unfortunately, many people tend to get injured on a regular basis because of someone else's negligence. These injuries can range anywhere from minor to severe and have a number of consequences. While these injuries can result in devastating consequences that are overwhelming and unfair, there is hope.
Accident victims can file a personal injury claim and seek compensation for economic and non-economic damages. Most of the time, the victim accumulates a heap of medical bills and has to stop working permanently or temporarily, resulting in lost wages.
In most cases, to get compensation, victims have to file a claim with their insurance company or the at-fault party's insurer. This negotiation process tends to be quite complicated and lengthy, as insurance companies often want to pay out as little as possible. That's why it's crucial to know how insurers value injury claims. This will help individuals determine what they can expect from a settlement amount and whether they should accept it or not.
How Do Insurers Value an Injury Claim?
There are a number of damages and expenses insurance companies cover as a result of an injury sustained due to someone else's negligence or reckless behavior, such as:
Loss of income
Permanent disability or disfigurement
Pain and suffering
Other non-economic damages
Determining the value of a claim is much simpler when the claimant does not file for non-economic damages. If the victim only files for economic damages, the amount of medical expenses, lost wages, cost of repairs or replacement of the property, and other expenses incurred as a result of the incident are added together.
When filing for non-economic damages, the calculation gets slightly more complicated as these factors are more subjective. Therefore, the insurance adjuster may choose from a number of methods when valuing the personal injury claim.
It's important to note that insurers don't put the same effort in when calculating the value of losses and damages as personal injury attorneys. Rather, they tend to use a one-size-fits-all approach. These methods are not always accurate as they don't consider the nature or circumstances surrounding the accident that led to the injuries.
A personal injury attorney, on the other hand, adopts a much more personalized and thorough approach. This ensures the victim receives the maximum compensation they're entitled to and can recover properly, physically, emotionally, and financially.
Let's look at some of the most common methods used to calculate the value of a personal injury claim:
The Damages Formula
This is one of the most common methods adopted by insurance companies. When using the damage formula, the first thing the insurance company does is determine the victim's total medical expenses after the accident.
Next, when it comes to valuing non-economic damages, the insurance adjuster will multiply the sum of the medical bills by a specific number decided upon based on the severity of injuries suffered.
Minor injuries are usually multiplied by a number between 1.5 and 3. If the injuries are considered to be medium, the multiple will either be 3 or 4. When it comes to permanent or severe injuries, the total medical expenses is usually multiplied by 5 or more.
After this, the insurer will add the value of lost wages to the calculated figure. This is usually the number at which negotiations will begin. As more facts and evidence become available, this settlement amount will start to change.
The Per Diem Method
The "per diem" method is another common approach insurance companies use when figuring out the victim's pain and suffering and other non-economic damages.
In Latin, "Diem" means "day". Thus, under this method, non-economic damages are assessed using a daily rate.
This implies that the victim has the right to request a specific sum of money (referred to as a "per diem") for each day that they endure pain and suffering as a result of the other party's negligence.
The Multiplier Method
The multiplier method is generally used when the insurance provider assigns a specific value to the non-economic damages suffered by the claimant. Under this method, the insurance adjuster will multiply the sum of special damages, which includes medical bills, lost wages, and property damage, by a chosen multiplier. This multiplier is usually determined on a scale of 1-5. Insurance companies tend to use 3 as the multiplier in these cases.
Therefore, if the total value of damages is $20,000 and the chosen multiplier is 3, the insurer will value the personal injury claim at $60,000 ($20,000 x 3).
However, just like the damage formula, this multiplier tends to vary in accordance with the severity of the injuries sustained. Other factors that are considered include any aggravating circumstances, the recovery timeline, and more. There are situations where a multiplier higher than 5 is chosen. An example of one of these circumstances is when the responsible party caused a car accident because they were driving under the influence of drugs or alcohol.
Factors Affecting the Value of Personal Injury Claims
A personal injury settlement amount involves much more than economic damages. Insurance adjusters can't only consider the value of physical expenses related to the accident. Other factors the insurance company needs to consider to arrive at a fair value for compensation include:
The total amount of medical treatment, physical therapy, rehabilitation, hospital bills, surgery, and out-of-pocket expenses. It's vital to consider any expenses related to the diagnosis, treatment, and recovery process.
The replacement or repair cost of any damaged property.
How many days or weeks of work the victim missed as a result of the accident.
The value of the victim's car if it was damaged during an accident.
The manner in which the injury affects the victim's earning capacity.
How long it takes to recover from the accident.
Whether the victim is expected to recover fully or not from the incident.
The extent to which the accident has affected the victim's daily life.
Any emotional distress, anguish, or trauma caused as a result of the accident.
Available evidence and the strength of legal arguments supporting the personal injury claim.
Keep in mind that these are not the only factors considered, but they are some of the most important factors taken into account when valuing a claim.
It's quite normal for insurers to offer a low initial settlement offer that is not fair compensation for the injuries suffered. This is why it's recommended to hire a professional and the best personal injury lawyer who has the knowledge and ability to handle the claim and negotiate successfully.
Experienced lawyers know how to determine the value of all short-term, long-term, past, present, and future damages and losses to ensure clients get the maximum compensation they're entitled to. Plus, if the insurance company doesn't want to negotiate or offer a fair settlement amount, a knowledgeable attorney will file a personal injury lawsuit to ensure their client gets the justice they deserve.
Does a Victim's Degree of Fault Impact the Value of the Claim?
Yes, the settlement offer will most likely be impacted by the victim's degree of fault. In general, under personal injury law, the value of the claim is reduced by the percentage of the victim's negligence.
However, different states adopt different practices. States either follow a comparative negligence or a modified comparative negligence system. Under a comparative negligence system, victims are allowed to recover damages regardless of their degree of fault. Thus, even if they were more than 50% responsible for the accident, they may file for compensation.
Under a modified comparative negligence system, this is not the case. Anyone who lives in a state that adopts this system may not seek compensation for their injuries if they were more than 50% to blame for the accident.
Why Is It Crucial to Hire a Personal Injury Lawyer?
A personal injury attorney will analyze the specifics of the victim's injuries and ensure they understand their legal rights. Naturally, anyone who suffers a serious injury and works with a lawyer rather than attempting to handle the personal injury claim on their own receives a higher settlement amount.
Dealing with difficult insurance companies while trying to recover from a devastating accident is not ideal. Insurance companies have an incentive to settle personal injury claims for as little as possible. Schuerger Shunnarah Trial Attorneys can advice on questions like what does an insurance adjuster do? Therefore, insurance adjusters often try their best to get claimants to accept low settlement offers. It can be easy to fall into the trap when trying to recover and deal with the confusion of an accident.
This is why it's crucial to work with an experienced attorney and never give a statement to the insurance company without speaking to a lawyer. There's no need to communicate with the insurance company at all. Leave this to the lawyers. A reputable attorney with expertise will negotiate with the insurance company on their client's behalf. This gives the victim the time they need to heal and is the best way to get the money the claimant deserves.
Furthermore, an attorney will help gather evidence to prove the true worth of the personal injury case. A few of the things a lawyer will obtain and use to prove the value of the claim include:
Other economic losses
All these important pieces of evidence are used to prove the cost of the accident. Furthermore, a reputable lawyer will also communicate with their client's doctor to discuss future medical expenses, treatment, and needs. Attorneys also work tirelessly to obtain physical evidence, such as photos of the accident scene, witness testimonies, video footage, and more.
The insurance provider might make the argument that the claimant's injuries weren't actually caused by the incident in question, but rather by a prior collision or a preexisting condition. However, a personal injury attorney will consult with medical professionals and experts in accident reenactment who can testify in favor of the claimant to support their case.
Additionally, an attorney will ensure that they adhere to any filing date requirements. There is a statute of limitations in Texas that sets a deadline for filing a personal injury claim. Accident victims risk losing their ability to file claims if they don't submit their personal injury lawsuit before the deadline. Due to the complexity of personal injury law, it's often easy to miss the deadline and forfeit any entitled compensation. However, when working with a reputable attorney, there's no need to worry about something as simple as deadlines. This also allows the victim to focus solely on recovering from their accident injuries and any other emotional trauma.
Lastly, if the settlement or claims process doesn't go to plan, it's vital to have a skilled lawyer who can provide legal representation in court and fight for their client's right to compensation. At Schuerger Shunnarah Trial Attorneys, our experienced lawyers are ready to take on any personal injury case and ensure justice is served!
Speak to an Experienced Personal Injury Lawyer Today!
Experiencing a catastrophic accident is traumatic and overwhelming. The last thing anyone wants to do is fight with an insurance company over a fair settlement amount. A knowledgeable and professional attorney will help their client obtain full compensation for the injuries suffered as a result of someone else's reckless behavior.
The compassionate and dedicated lawyers at Schuerger Shunnarah Trial Attorneys in Houston, Texas, have years of experience when it comes to personal injury claims. Our lawyers are ready to represent anyone who has suffered as a result of someone else's carelessness and will ensure the victim's rights are upheld.
With years of experience, we know how to negotiate with difficult insurance adjusters. However, in the event that the insurance company is unwilling to raise their offer, we'll help you file a personal injury case and are ready to go to war for you! We've had many successful personal injury cases over the years and know what it takes to recover the maximum compensation. Contact us today for a free consultation.