How Does Insurance Company Approach Valuation of Injury Claim?

Once an insurance adjuster has been assigned a claim, the same adjuster studies the accident report, in an effort to determine who should be held responsible. In addition, the adjuster’s list of tasks includes that of determining the value of the claimant’s injury.

The claimant must be compensated for certain expenses.

• Cost of medical care received, after being injured in the accident
• Income lost, while recovering from the injury
• Any permanent effects of the injury: These could be minor effects, such as a scar, or something major, like the need to remove a limb.
• The loss of family, social or educational opportunities
• Damaged property
• Pain and suffering

How adjusters estimate the size of the required compensation

Simple mathematics can be used to calculate the amount of money used to cover most of the expenses. Still, it is hard to place a dollar figure on the value of pain and suffering. For that reason, many adjusters rely on the availability of a formula, as per personal injury lawyer in Halifax.

What figures get placed in the adjusters’ formula?

First, the adjuster adds up the total for each of the claimant’s medical bills. That gives the value of the medical expenses. That sum becomes one factor in a multiplication. The other factor is a number between 1.5 and 5. Sometimes it is a number that is a bit larger than 5. The second factor is supposed to represent the degree of the claimant’s pain and suffering. Following a catastrophic collision, that factor could be 6 or 7. The adjuster multiplies those 2 factors, in order to obtain a product. The value for the claimant’s lost income gets added to that product. The final figure becomes the one that must guide the adjuster’s approach to the assigned claim.

What do adjusters do with the value obtained by using the formula?

Legally, adjusters do not have to use the formula, or the value obtained by the same formula. In fact, some adjusters ignore that value and give the claimant a low-ball figure at the start of negotiations.

Yet that does not represent the approach that an insurer (the adjusters’ employer) tends to favor. Insurers prefer to have their adjusters presenting their assigned claimant with a reasonable offer at the start of negotiations. So, how do they arrive at the reasonable offer?

That question highlights the purpose of the figure obtained by using the formula. That provides adjusters with a figure that can be used for making the first offer, in response to the demand letter. After that, the adjuster and claimant negotiate, in hopes of reaching a settlement. The value of the settlement is less than the amount in the demand letter and more than the amount in the insurer’s opening offer.

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