How Insurance Companies Value Injuries

The actual worth of your accident injuries is crucial to the firming up of a personal injury claim and is usually the most difficult part to determine since the amount depends on specific circumstances. As an injury victim, you need to know how insurance companies view your type of claim so that you can get compensated for the damages you have sustained.

Types of Damages Due to Injury
A person who is responsible for an accident is known as the liable party. This person’s liability insurance company is obligated to pay you, the accident or injury victim, for the following damages:

  • Medical care and other related expenses
  • Loss of wages due to the victim being unable to work because of injuries
  • Physical disability or permanent disfigurement
  • Loss of family
  • Loss of social and/or educational experiences
  • Damaged property
  • Emotional damages (stress, depression, humiliation, strained family relationships, i.e. inability to care for children, etc)

The Computation of Damages
Determining the amount of compensation is not simply summing up the money spent and the money lost. This is because there is no way to put an amount on the intangible damages, such as pain and suffering, lost opportunities and the psychological repercussions of an injury. Insurance companies have a formula they use to compute these damages. In doing so, they take the following steps:

  1. When a claim is being negotiated, the total of the medical expenses incurred due to the injury are summed up. These are categorized as “special medical damages.”
  2. The special medical damages figure forms the base figure that the insurance adjuster uses in determining how much to compensate the injured person for nonmonetary losses, such as pain and suffering. These are called “general” damages.
  3. The insurance adjuster then determines if an injury is either minor or major (serious, grave). If an injury is only minor, the insurance adjuster multiplies the total amount of the special medical damages by 1.5 or 2. For a particularly painful, grave or extensive injury, the adjuster multiplies the amount by 5, or even 10 in extreme cases.
  4. After classifying an injury as major or minor and computing the total amount of special medical damages, the adjuster then adds on any loss of income, which is a result of the injuries. This figure, however, is not a final compensation amount, but just a number from which negotiations can begin.

Determining the Percentage of Fault
The damages formula gives injury clients a range of the worth of their injuries. It is only after you determine who is at fault that you can compute the actual value of your compensation claim. While there is no definite formula for determining fault for an accident, it is advisable for both you and the insurance adjuster to have an idea whether the person concerned was entirely at fault, or if you were partially at fault. This is known as the “percentage of fault” figure, and the amount of this comparative fault is factored into the damages formula. Once the percentage of fault is factored into the damages formula, the reductions will determine the final compensation figure.