It can be difficult to predict what a personal injury claim is worth. However, knowing how the insurance adjusters are valuing your claim can be a helpful way to make an estimate. Insurance adjusters actually have a formula that they use to determine how much a particular injury will end up costing them. It does not technically determine how much compensation someone will receive, but it does give the insurance adjuster a starting point. This formula is often called the “damages and compensation” formula.
Necessity of the Damages and Compensation Formula
When you are involved in a personal injury lawsuit, you can make a claim for a variety of factors. Most insurance companies will cover specific items that you may have lost after an accident in addition to direct results of the accident, such as medical expenses. Some of these liabilities include:
- Medical bills
- Lost income or missed work
- Physical pain and suffering
- Permanent physical or mental disability or disfigurement
- Emotional damages including anxiety
- Losses related to social, educational, or family experiences (often referred to as loss of enjoyment of life)
- Property damage
While some of these things are directly tied to costs, many of them are difficult to estimate by nature. For example, you cannot put a dollar figure on the loss of a loved one or your own physical pain and suffering. The formula is used to estimate these unquantifiable factors, so the insurance company has hard numbers to work with.
How the Formula Works
At the beginning of every claim, the insurance adjuster will tally up all of the medical expenses that have been incurred so far. Then, he or she will multiply this amount by a factor that is usually between 1.5 and five. The factor will vary depending on the severity of the accident. If the accident is relatively minor, such as a small fender bender, then the factor will be low. Accidents that seem like they will result in long-term injuries, or that involve injuries that were particularly painful, will have a higher factor.
These damages are commonly referred to as “general damages,” because they cover a variety of difficult to quantify areas, including loss of enjoyment of life and physical pain and suffering.
Next, the insurance adjuster will estimate your lost wages while you are recovering. This number is easier to calculate because it is based on the amount of time your doctor deems it necessary for you to be off work multiplied by your regular wages.
The three categories of damages– medical expenses, “general damages,” and lost wages—are then added together to provide an estimate of what the case is “worth.”
Getting Legal Help
Insurance adjusters will not tell you what their assessment of the situation is when you are negotiating. Instead, your attorney will be able to help you with this estimation process. The facts of your case will be extremely important to the estimate, and, as the facts develop, the estimate may change. Jim Glaser Law can help you through this process so you can get a fair settlement after asserting your personal injury claim.