Before filing a personal injury claim, you may want to understand how much you can expect from a settlement offer. While this is difficult to determine as a generality, you can begin to understand the process of valuation by learning how insurers determine a payout.
If you are approached before entering into settlement negotiations with an attorney, then you will likely be talking with an insurance adjuster. It is always advisable to hold off talking to insurance company representatives until you have spoken to an attorney who represents your interests. An insurance adjuster works for an insurer and is therefore motivated to save their company as much money as possible, which almost always means a minimum settlement offer. Therefore, to prepare yourself, it is often necessary to understand how an adjuster comes up with their low offers.
When determining what they consider to be a fair settlement, an adjuster will evaluate several factors. In fact, they will likely turn to five details specifically.
- Documented expenses
Documented expenses include medical bills and property damage. However, the injuries and damages must be consistent with the accident.
- Loss of income
Next, they will consider the loss of income or earnings. This loss is not limited to past wages, it might also include present and future wages as well, depending on the extent and prognosis of the injuries.
Next, the adjuster will review the injury itself. Are your damages recoverable? Did you sustain a permanent physical disability or disfigurement? All these details weigh into the final decision.
- Emotional duress
Anxiety and trauma are real issues that often arise after an accident. If you are receiving treatment for any psychological problems as a result of the accident, then the adjuster might take that into account as well.
- Pain and suffering
In addition to emotional duress, adjusters will consider pain and suffering, which includes loss of consortium or problems in the marital relationship.
After the adjuster has gathered all of the necessary information, they will crunch the numbers and determine value. Most adjusters will use one of two possible systems for this valuation.
- Per diem system
This system places a per day value for suffering. Once that value is figured, they will multiply it by the total number of days of suffering to come up with an offer.
- Pain multiplier system
In this simplified system, the adjuster uses medical bills and lost wages to determine a fair settlement. They take the total of the bills and wages and multiply by a number between 5 and 15.
While adjusters are only doing their job, it is necessary to protect your interest. Contact a personal injury attorney to discuss your case before having any settlement discussions with insurance representatives.