Every insurance company and attorney has their own method for calculating the potential value of settlement offers. Ultimately, what an insurance company may offer in a settlement comes down to the least amount of money they think you will accept to drop the matter. Some of the ways that they determine settlement values include the following:
Formulas
Insurance companies and defense attorneys may use a damages and compensation formula. This formula may take various aspects of the personal injury claim into consideration to create a unique formula. For example, they may add up medical bills, lost wages, and projected repair costs and apply a multiplier to account for pain and suffering and other non-economic damages.
Here is an example of how using a formula like this would work:
You are involved in a car accident. You have medical costs of $10,000. You are out of work for a month, losing $5,000 in wages. Your property damage is $3,000. This makes your economic damages $18,000. The insurance company uses a multiplier of 2 to account for your non-economic damages, so your non-economic damages are valued at $36,000 in this example. The insurance company calculates the value of your claim under this formula as $52,000.
There is no standard formula. Even if you use damage calculators you find online, these are usually calculators that simply add up the various aspects of the claim, not realistic estimates of what your case might be worth, which could be substantially more or less than these calculators state.
Knowing that the insurance company’s initial offer is based on some arbitrary formula can provide you with greater insight when negotiating for fair compensation.
Software Programs
Another common way that insurance companies estimate the value of settlement offers is by using software programs. These proprietary programs may take various pieces of information, such as the costs that other claims were resolved for, court verdicts for litigated cases, average costs associated with medical treatments, repair costs, lost wages, and other information to give a rough estimate for a settlement.
Counter Offers
After the insurance company receives a demand letter from a personal injury lawyer, an insurance adjuster may send a response that offers a certain percentage less than the demand. For example, if a policyholder has $100,000 in coverage, the adjuster may make a counteroffer at 60% or $60,000.
Trial Proven20+ Years ExperienceRecord Breaking Verdicts
Schedule a Free Consultation
Level the Playing Field with an Experienced Personal Injury Attorney
When you are dealing with a difficult insurance company, it’s crucial to understand that its interests are directly opposed to yours. The insurance company wants to resolve the case for as little money as possible, but you want to ensure that you receive fair compensation that can cover your future anticipated expenses.
The dedicated legal team at Dulin McQuinn Young is here to help. We can help calculate all short and long-term losses associated with your accident and fight to recover compensation on your behalf that fairly reflects these losses. Contact us today to arrange a free consultation. 0