How insurance companies value injury cases

The way your insurance company puts a value on your personal injury may seem reasonable at first, and in some cases, it may provide a 100 percent accurate picture. In the long term, however, many injured people who accepted early settlement offers realize that the value was merely a starting point, and they deserved higher amounts of compensation.

So, what do insurance companies do to arrive at a valuation?

Follow a formula

Insurance adjusters tend to follow formulas that take into account your medical bills and related expenses, any permanent disabilities from the accident, your lost income and your property damage. You may be surprised to learn that some companies also account for factors such as loss of socialization and emotional damages. For particularly serious injuries, the adjuster might multiply damages such as pain and suffering by up to 10 times. For more minor cases, it might be multiplied by 1.5 or 2.

Make the offer

Once the insurance company has the amount determined by following the formula, it makes you an offer. However, the company has no financial incentive to go past that amount. To some people, the initial offer may seem fair and good, but the big picture often tells a different story.

Work quickly

One key is that the insurance company usually works quickly. Adjusters want to do this before the full extent of injuries becomes clear. They want have the offers accepted and out of the way before injured people realize the many ways in which an injury impacts them emotionally and physically in both the short term and long term.

The value an insurance company puts on your personal injury claim is likely not a full valuation of how the injury has affected you and will continue to affect you. This value, however, can provide a useful starting point to begin negotiations for what you perceive is a fairer amount. It is also true that a formula may not provide a lot of leeway for your circumstances.