How Do Insurance Companies Calculate Personal Injury Claims?

When you’re injured in a motor vehicle accident, insurance companies enter your life in a big way. You may be working with your own insurer, the other driver’s company or both.

It’s important to understand how insurance adjusters value injury claims. That way, you can get a better idea of whether you should accept their settlement offer or not.

Insurance Companies Are About Making Profit

Insurance companies notoriously undervalue injury claims. They’re businesses that care about making money. That’s why they tend to offer settlements that are worth far less than you should get.

Every time an injured person accepts a lowball insurance settlement, it saves the company money. It’s always in your best interest to consult with a Texas personal injury lawyer before accepting any settlement.

The Insurance Adjuster First Assesses Your Damages

In most Texas personal injury cases, the insurance company may cover two types of damages:

• Economic damages: This phrase refers to items with a clear monetary value, such as medical bills, the cost of damage to your vehicle, loss of income and other expenses from the accident.
• Non-economic damages: These are damages that are not straightforward to calculate. Pain and suffering, mental anguish, emotional distress and compensation for disfigurement are all in this category.

Insurance Companies Then Calculate Your Damages to Arrive at a Settlement Value

The adjuster can easily calculate economic damages by adding up bills. But non-economic damages don’t have a clear monetary value, so how are they calculated?

Insurers frequently use the multiplier method to estimate non-economic damages. With this method, the adjuster takes the amount of economic damages and multiplies it by a number, usually one through five. More severe injuries use higher numbers.

Let’s say your economic damages totaled $50,000. If the insurance company uses a multiplier of 3, your non-economic damages would be $150,000. Adding your economic and non-economic damages together, your total claim value would be $200,000.

In some situations, the multiplier can be higher than five. This might happen when there is an aggravating factor, like if the at-fault driver was intoxicated at the time of the crash.

Think of the Insurance Settlement Offer as a Starting Point for Negotiation

Insurance companies often use one-size-fits-all calculators to estimate damages. They don’t invest much time in actually diving into the facts of your situation. And, of course, their end goal is to minimize how much they pay out.

Injured people who receive settlement offers should take the offer to an attorney for review. A good lawyer can usually help you negotiate for more compensation or file a personal injury lawsuit.

Consult With a Dallas Personal Injury Lawyer

If you’ve been hurt in any kind of motor vehicle accident, talk to the lawyers of Ted B. Lyon & Associates in Dallas. Call 877-Ted-Lyon or contact us online. Our attorneys can evaluate insurance settlements and advocate for the maximum compensation you deserve.