Personal Injury Lawyer

How Do Insurance Companies Determine Personal Injury Settlements?

When you sustain injuries in an accident or other event caused by someone else’s negligence or wrongdoing, you may decide to sue the responsible person to recover your costs and other damages stemming from your injuries. This in turn means that you, or more likely your personal injury attorney, will have to deal with the defendant’s insurance company and its adjusters.

Settlement Process

Each insurance company has its own process for determining how much it will offer you as a settlement. The adjuster generally will proceed in the following manner:

  • Obtain your version of the accident, plus that of the policyholder
  • Request documentation of your claim, such as your medical bills, proof of earnings, proof of property damage, recent tax returns, etc
  • Investigate you personally to find out if you have had other accident claims in the past and their results or if you appear to be malingering, etc.
  • Determine the ballpark value of your claim
  • Offer you a substantially lower amount as an initial settlement offer
  • Negotiate with you or your attorney to increase this amount
  • Aggressively represent the policyholder if your case goes to trial

Determining the Settlement Amount

Keep in mind that the insurance adjuster is not your friend. He or she works for the insurance company with the job of getting you to accept the lowest possible settlement. Consequently, after going through all the documentation you provide plus any available police or accident reports, he or she will decide in his or her own mind your likelihood of winning your personal injury lawsuit and the amount of damages the jury likely will award you.

Armed with all of the above, he or she will then calculate a settlement amount based on the perceived value of your case. Some insurance companies use the per diem method, meaning that they assign a dollar figure, say $100, for every day from the date of your accident to the date when you obtained your maximum recovery.

Most insurance companies, however, use the multiplier method. Here the adjuster adds up your economic damages, i.e., medical and other bills, and multiplies this amount by an arbitrary figure, usually somewhere between one and five, to estimate your noneconomic damages, such as your pain and suffering. He or she then adds this amount to your economic damages and also adds in your lost wages. The final figure represents what he or she views as a fair settlement.

Getting Legal Help

Not surprisingly, you stand a much better chance of receiving a high settlement offer if you hire an experienced personal injury attorney to represent you and conduct the settlement negotiations on your behalf rather than attempting to do this yourself. Consider discussing these matters with a personal injury lawyer in Rapid City, SD from a firm like The Law Offices of Clayborne, Loos & Sabers LLP.