One of the most common questions accident lawyers hear from potential clients has to do with the amount of compensation an insurance company will offer for the losses and damages incurred after suffering a personal injury. The challenge with this inquiry is that there is more than just one answer. Injury claim recompense can be a tricky value to estimate upfront because there are so many variables involved and because no accident claim is the same.
Continue reading to learn some basics about how insurance companies might estimate the amount of compensation they will pay out for an accident claim.
Evaluation of Related Damages and Losses
An insurance company will initially look at what they are compensating you for. There could be a number of damages that validate compensation, such as hospital bills, medical expenses, lost wages, prolonged physical therapy, permanent handicap or disability, loss of companionship, loss of ability to perform work duties, reduced quality of life, emotional distress, physical pain, damaged property, and any other aspect of life that was negatively affected as a result of the injury. Once an insurance company makes this assessment, the next step in the standard claim process is generally the insurance company’s losses and damages formula.
Losses and Damages Formulas
The damages formula is exactly what it sounds like; it formulates a victim’s losses and damages into a numeric value. Insurance companies use the same damage formula to attain what it believes to be a fair and reasonable dollar value that is equivalent to the total amount of damages suffered by a claimant. The complicated part is assigning an appropriate dollar value for pain and suffering, emotional distress, mental anguish, and other non-economic damages. See our article, “The Difference Between Economic and Non-Economic Damages”, to learn more about such damages.
An Example of How a Formula Might Work
Although it differs from carrier to carrier, the basic process of using the damages formula involves calculating the total dollar amounts for hospital and medical expenses. This is the principle figure the insurance company uses to determine the dollar amount assigned to pain and suffering. For minor injuries, the insurance adjuster may multiply the principle number by a predesignated lower numerical value, such as 1.5 or 2.
However, the more serious the injury, the higher number, which can be as high as 5. If the injuries result in long-lasting or permanent implications, such as an amputation, medical condition, or disability, the number may go all the way up to 10. Once this value is calculated, the insurance company adds on any additional compensation necessary for losses, such as lost income from missing work, and similar economic losses.
It Takes More Than a Formula
Although the insurance company damages formula is complete at this stage, their final figure is not the amount of compensation that will be recovered. It is just the foundation used by the insurance companies and personal injury attorneys during negotiations. The number may increase if the accident attorney can prove more damages, or the extensiveness of damages. Also during negotiations, the percentage of fault among each party is assessed and applied to the deciding factors of the case. This is a central reason why you need a seasoned Indianapolis personal injury lawyer to represent your best interests after being injured in an accident caused by the negligence of another.