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How Do Insurers Value an Injury Claim?

The basic tenet of personal injury claims is that a monetary value can be placed on the injuries and damages suffered by the victim. However, matching the right dollar amount to the losses of the plaintiff is also one of the most controversial and challenging aspects of the claims process. Usually, the party liable for the losses to the victim is responsible for compensating the victim, but different liability insurance companies have different methods of valuing an injury claim.

Read on to find out about the damages formulas used by insurance companies, and about how “percentage of fault” can lower the value of the final compensation while experienced legal representation can raise its value.

Losses the Insurance Company Must Compensate

There many types of losses that can be linked to an injury. Different types of compensatory damages generally fall under two categories: “special damages” and more speculative “general damages”. Here is a list of some of the losses that the insurance company must compensate:

  • Medical care and related costs
  • Lost wages or earning capacity as a result of the injuries
  • Compensation for permanent physical disability or disfigurement
  • Cost of damaged property
  • Emotional damages, strained relationships, and other general damages

The Insurance Company’s Damages Formula

The formula used to account for the damages listed above can differ from one insurance company to another, but the formula will generally add up all the special damages such as medical costs, lost income, and property damages before considering general damages and then multiplying the damages by some factor accounting for the severity of the injury.

It goes without saying, the more severe the injury, the higher the compensation is likely to be, but it is extremely difficult to judge the severity of an injury. For example, hard injuries are often considered more serious than soft tissue injuries, but soft tissue injuries can sometimes take longer to heal than broken bones.

A damages formula will also consider facts about a victim’s background. For example, children and senior citizens often receive higher compensation because they’re considered more frail, but sometimes teenaged and middle-aged victims’ lives may receive high compensations when their lives are seriously changed by the injuries; wealthy victims who suffer a severe decrease in earning capacity due to the injury may be entitled to higher compensation.

Percentage of Fault

It is important to remember that the result of the damages formula is not the final amount of compensation that the personal victim will be entitled to – it’s merely the starting point for negotiations. One thing that can seriously affect the final recovery is the percentage of fault that can be assigned to the victim. A simplified example would be if the insurance adjuster finds that you suffered $300,000 worth of damages, but then decides that you were about 25% at fault for those damages, so you’re only entitled to a $225,000 recovery. (For an explanation of comparative negligence in Texas, refer to our earlier post on that subject.)

Representation by an Experienced Personal Injury Attorney

All insurance companies know that it is illegal to undercompensate a personal injury claim, but profitable injuries employ a number of strategies to minimize the amount legally owed to you. A specialized attorney who is knowledgeable of modern insurance policies and also understands personal injury law has the ability to negotiate a fairer recovery for you.

An experienced personal injury attorney knows what the bottom range for your type of injury is and will be able to make a persuasive case for a higher offer and a more favorable percentage of fault. In fact, the insurance companies’ own statistics suggest that once an attorney enters a claim, the claim’s value doubles on average.

If you or your loved one has been injured due to somebody else’s negligence, contact the experienced Texas injury attorneys of Colley & Colley, LLP today. We take all cases on a contingency fee basis, meaning we won’t earn a penny until we win your case for you, and we always offer a free initial consultation on any injury-related claim.