How Do Insurance Companies Determine What Claim Is Worth?

Circumstances differ for each situation that has given rise to a claim. Yet insurance adjusters focus on those factors that manage to influence the outcome for almost any claim-worthy situation.

Not all of the victim’s losses get compensated.

Some of the compensated losses have a clear monetary value
-Medical expenses
-Lost income
-Disability, or a disfiguring condition
-Loss of family, social or educational experiences
-Property damage
Any damages associated with pain and suffering do not have a clear monetary value
-Emotional distress
-Inability to enjoy a hobby
-Loss of enjoyment of life

Insurers use a damages formula to calculate a claim’s worth.

One of the entries in that formula comes from adding up all of the medical expenses, the medical specials. A second entry is a number that usually falls between 1.5 and 5. That number is supposed to represent the severity of the claimed injuries. Each of those 2 entries is a factor in the insurer’s formula. Following the multiplication of those 2 factors, a third number gets added to the product. That 3rdnumber is the value for the lost income.

The significance of number obtained by the insurer’s utilization of the formula.

That number offers insight into the value of the compensatory damages. An insurer has no way of knowing for sure whether or not a judge might order punitive damages, if the issues related to the claim were to get resolved in a courtroom. Adjusters use that number to guide them with deciding on the figure to propose at the time of the initial bid.

The smart claimant studies that initial bid, and compares it with a figure in the claimant’s mind. That specific figure should represent the minimum amount of money that the claimant would agree to accept, once the negotiations had started.

The initial bid is usually much smaller than the amount of money that represents the claimant’s concept of the minimum acceptable offer. If it does not fall far below that conceived minimum, then the claimant needs to do some re-thinking.

Negotiations involve give and take, with both sides changing their previous offers. Consequently, at the start of negotiations, there should be a decided gap between the claimant’s and the adjuster’s offer, as per a personal injury lawyer in Cambridge.

That gap could not exist, if the claimant were to put forward a bid that was close to the conceived minimum offer. If the gap disappears, the bargaining that should take place during the negotiations becomes impossible.

So, what should claimants do if their conceived minimum is close to the initial offer? In that situation, smart claimants should re-study their claim, in order to replace the old number in their mind with one that is larger.