Will the insurance adjuster use a settlement formula in valuing my injury claim?

Question

Will the insurance adjuster use a settlement formula in valuing my injury case?

Answer

After you've given the insurance adjuster all of the information he or she needs about your injury claim -- including medical bills, proof of lost income, repair estimates, and anything else that demonstrates what you've lost because of the accident -- the next step is coming up with a dollar figure that captures those losses and can serve as a starting point for settlement negotiations. And insurance adjusters do often use some variation of a formula to arrive at this number.

First, the adjuster adds up the medical bills related to the injury, and then this base figure (called "medical special damages") is typically multiplied by between 1.5 and 5, depending on the seriousness and of the injuries and how long they last. For example, minor injuries would get a multipler of 1.5 or 2, while serious and long-lasting injuries would get a multiplier closer to 5. For cases involving severe and permanent injuries like paralysis, the multiplier might be as high as 10.Whatever the multiplier that is used, the resulting number represents your non-economic losses or "general" damages (also known as pain and suffering). (Learn more about Damages in an Injury Case.)

Next, the medical specials and the general damages are added together.

Finally, added on top of that sum is any lost income, property damage, or other tangible damages.

So, here's what the settlement formula might look like for a car accident involving minor injuries:

\$1,500 in medical special damages

\$3,000 in general damages (\$1,500 multiplied by 2)

\$1,000 in lost income

\$1,500 in vehicle damage

Here, the formula would come up with a value of \$7,000 for this claim. But keep in mind that any settlement formula only provides a ballpark estimate of the value of your injury claim, and the resulting dollar figure is only intended as a starting-off point for settlement negotiations.

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