How Insurance Companies Value Personal Injury Claims

DriverKnowledge.com reports 3 million people are injured in auto crashes every year. According to the U.S. Centers for Disease Control and Prevention, motor vehicle related injuries send more than 2.3 million people to hospital emergency departments each year. To you, an injury car accident will likely be a one-time event that causes a serious disruption in your life, both physically, emotionally and financially. To an auto insurance company, however, it is business as usual.

When an insurance company is notified of a claim against its insured arising out of an accident, it opens a claim file, assigns a claim number to that file, and then sends that file to an employee who specializes in handling such claims, referred to as an adjuster or claim representative. The adjuster is responsible for investigating, monitoring and settling the claim. It should go without saying that insurance adjusters are not looking for reasons to pay more on a claim. They are looking for justifications to pay as little as they can to settle a claim. In almost all personal injury claim an adjuster will raise some issue with respect to either liability, economic damages and/or noneconomic damages.

A personal injury claimant has the burden of establishing that the other party was a fault for the accident. And in Washington, a claimant’s damages can be reduced by the percentage a jury concludes the claimant’s own negligence contributed to the accident. In a rearend auto crash the liability of the other driver may be clear. But even in these cases, an adjuster may argue that you were partially at fault and should have your damages reduced for some claimed negligence on your part, such as stopping abruptly without adequate warning. Even where the other driver admits running a red light in an intersection crash, the adjuster may still argue you were partially at fault and should have your damages reduced, because you should have realized the other driver was not going to stop for the light and taken evasive action. These are arguments that have actually been made by adjusters in claims we have handled.

Personal injury claimants also have the burden of establishing the amount of their economic damages.  You might think this amount can be easily calculated by simply adding up all of the medical bills, but this is often not the case. Insurance adjusters frequently take the position that soft tissue injuries such as sprains and strains should resolve in three to four months, even though your own doctors recommend you continue treating for a year or more for ongoing pain. If personal injury protection insurance is involved or your claim is in litigation, the adjuster will have to back up their position with an expert medical opinion. But there is an entire industry of doctors making very good money providing just such opinions to insurance companies, regardless of what your own treating doctors may conclude. Insurance adjusters will also look for gaps in treatment as justification for offering less than the full amount of your medical bills. You may have stopped treating for a while hoping your injuries would resolve on their own, or because it became too difficult or expensive for you to continue treating. An adjuster will point to this gap in treatment as evidence that your injuries were not as serious as you claim, or that your complaints after you resumed treatment were not result of the accident giving rise to your personal injury claim.

Noneconomic damages, such as pain and suffering, are generally the hardest element of damages a personal injury claimant has to prove. Noneconomic damages are by definition not readily subject to mathematical calculation.  One method of putting a dollar figure on noneconomic damages adjusters use is to multiply whatever figure they decide to accept for medical expenses by some number, typically between 1 and 3, to arrive at the additional amount they will offer for pain and suffering and other noneconomic damages. The multiplier used will depend on the adjuster’s assessment of your injuries, using a higher multiplier for more severe or permanent injuries.  Many insurance companies use a software program to determine the value of a personal injury claim based on the information the adjuster inputs in response to questions posed by the software concerning the claimant’s injuries and treatment.

The evidence you have supporting your claim will directly affect the settlement value the insurance company places on your claim. Police reports and independent witness accounts can prevent an insurance company from trying to reduce your claim by some percentage for comparative negligence. Photographs of property damage and injuries help prevent the insurance company from arguing an auto crash was low impact and should not have caused significant injuries.  Medical records documenting your injuries and recovery are crucial.  Your own contemporaneous notes about your injuries and the impact of them on your daily life help support your claim for noneconomic damages.