How Do Insurance Companies Determine What A Claim Is Worth?

The value of a personal injury claim determines its worth. Certain noteworthy factors determine a given claim’s value.

The person that has been held responsible for contributing to the creation of an injury-causing accident becomes liable for these losses:

• Money paid to cover the medical expenses
• Income lost while victim recovered at home, or in the hospital
• Costs that were created by injuries’ physical effect, such as formation of a scar, or victim’s dependence on a wheelchair
• Loss of a significant experience, such as a vacation, or an opportunity to attend a conference
• Pain and suffering
• Damage to property

Insurance companies use a formula, in order to convert the various costs into an expression of the claim’s worth.

Outside of the pain and suffering, each of the other costs has a definite monetary value. Hence, the insurance company can add up each of those monetary values, and arrive at the total for the economic damages.

Personal Injury Lawyers in Carol Stream knows that in order to estimate the economic impact of the victim’s pain and suffering, the insurance company looks at the nature and severity of the reported injuries. The nature and extent of those injuries determines the value of the multiplier, which must be used in the company’s formula.

The multiplier is one factor in a multiplication procedure. If a victim has suffered only minor injuries, that multiplier is a small figure, such as 1.5 or 2. As the severity for any reported injury increases, the multiplier increases, up to 5 in some cases. In rare instances, the multiplier might be greater than 5, but less than 10.

The other factor in that multiplication procedure is the total for the economic losses. Once that product has been obtained, the insurance company then takes that product and adds to it the value for the victim’s lost income. The number obtained by placing the identified numbers into the established formula represents the value or a given claim.

What action does an insurer take, following the determination of a claim’s value?

The insurer shares the calculated value with the proper insurance adjuster, the one that has been assigned the valued claim. The adjuster prepares to make use of that calculated value, during the pre-settlement negotiations.

Many adjusters use that value when making the initial offer. Adjusters realize that the first offer gets reduced, as the negotiations progress. So, the final settlement does not guarantee delivery to the victim of an amount of money that equals the claim’s worth. That is why smart claimants should hire an attorney. An attorney would call an adjuster’s attention to each of the client’s/victim’s losses. In that way, the compensation that was agreed upon at settlement would allow the client/victim to enjoy a fair deal.

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