How Do Insurers Value an Injury Claim?
If you or somebody you love has been injured due to the negligence or carelessness of another individual or entity, you may be able to recover compensation for your losses. Typically, this includes compensation for medical bills, lost income, property damage expenses, various out-of-pocket expenses, and pain and suffering damages. However, how do insurance carriers establish the total value of a claim?
Here, we want to delve into the process that insurance carriers will take when coming up with a value for your injury case, but we also want to caution you. You should work with a skilled Sacramento personal injury lawyer who can help push back against the inevitably low offer an insurance carrier will make.
Insurance Carriers – Looking Out For Their Bottom Line
As we discuss the way that insurance carriers value claims, we must remind you that insurance carriers are looking out for their bottom line at all times. This means that they want to limit how much money they payout in a settlement, so the way that an insurance carrier values a claim will likely look a little bit different than the way an injury victim and their attorney values a claim. Keep this in mind, particularly as insurance carriers put forth settlement offers.
How a Claim is Valued
Insurance carriers use various “damage formulas” to estimate the total value of an injury claim. The first step will be establishing an injury victim’s total medical expenses following an incident.
In order to determine these medical expenses, insurance carriers will examine bills and receipts that come in after the incident, including the hospital bills, doctor visits, the costs of prescription medications and medical devices, any needed in-home care, and the cost of transportation to and from medical visits.
Insurance carriers will then examine the total value of lost wages if an injury victim cannot work while they are recovering. Valuing lost wages can be challenging, particularly if a person is out of work for a longer period of time. The insurance carrier will need to pay stubs, tax returns, bank statements, and even information from pay apps like PayPal, Venmo, and CashApp (particularly for independent contractors).
The more challenging aspect of valuing injury claims is coming up with a number for various types of economic losses, including pain and suffering, loss of quality of life, scarring and disfigurement damages, and more. Many insurance carriers will use a multiplier method to assign a dollar value for these losses. This includes multiplying the sum of all the economic expenses by a certain number, usually a number ranging from 1 to 5.
For example, if an individual sustains $50,000 worth of medical bills and lost wages due to an accident, the insurance carrier may multiply this number by “three” to reach a non-economic damage total of $150,000. Overall, the total value of the claim would be $200,000.
An alternative to the multiplier method is called the per diem method, and this involves assigning a dollar value to every day a person is expected to experience pain and suffering and then multiplying this number by how many days a person is likely to suffer as a result of the accident.