How Do Insurance Companies Calculate Settlements for Car Accidents?

By May 15, 2019 Car Accident

When you file a claim with or lawsuit against an insurance company for a car accident caused by the insured of the latter insurance company, insurance adjusters calculate a settlement offer. Sometimes the offer is well below what you may have expected while other times it is more or around where you expect it to be. Here’s what you should know about insurance companies and how they calculate settlements for car accidents in California.

The Necessary Documentation

The claim’s adjuster will review all the information and documentation related to the car accident. This includes the information you provide as well as the information that the at-fault driver provides, like:

  • medical records
  • medical bills
  • proof of earnings
  • tax returns
  • proof of property damage
  • accident reconstruction report
  • police report
  • eye witness statements
  • video
  • photographs
  • receipts for out-of-pocket expenses.

The claim’s adjuster will go through this information and documentation with a fine tooth comb. For instance, he or she will review medical records to determine if there was any existing illness or injury to cancel out the injury as a result of the car accident. The claim’s adjuster will review photographs and the video in light of the accident reconstruction report for any discrepancies. He or she will do the same with proof of property damage to ensure any property damage is indeed the result of the accident and did not exist prior to the accident.

Because a claim adjuster will meticulously review the documentation, it is always wise to — especially in serious car accident cases — have a personal injury attorney help draft the claim. The personal injury attorney can identify legal or substantive gaps you may have in the claim. The attorney will also, among other important things, determine a fair and just value for your claim. So, when the insurance company communicates its offer to you, you know how little or how close the offer is compared to the actual value of your damages.

The Settlement Offer Determination

Once the claim adjuster reviews all the documentation, he or she will add up all the non-economic damages. This part is relatively straight forward and is generally an accounting issue. There are receipts and bills and paystubs and tax returns, among other information, to help the claim’s adjuster identify the exact value of things likes:

  • medical expenses
  • lost wages
  • loss of earned income, if applicable
  • future medical expenses, if applicable
  • property damage expenses
  • out-of-pocket expenses
  • household service damages
  • other qualifying economic damages.

There is one important thing to note here about medical expenses. There is what adjusters call “soft” medical bills, meaning some expenses were paid to chiropractic services, physical therapy, massage therapy, or other “alternative” care services for treatment. Adjusters may value these expenses at less than the invoice amount, sometimes up to half of the invoice amount.

Further, the calculation of non-economic damages can also be somewhat problematic. Because this is a murky area and because the value of non-economic damages can be derived by different methods and is quite debatable, claim adjusters are more likely to err on the lower end. Different insurance companies likely have their own means to calculate it. Most require that, for the first offer, less than half the value of non-economic damages — according to their calculations — be offered. For example, if the insurer deems the value at $5,000, it may offer only $2,500.

Again, this is why having an attorney help you, advise you, review all the documentation, and work with the claim adjuster and insurance company directly is to your benefit. If you have been involved in an accident, like a car accident, and suffered personal bodily injuries, contact the Ledger Law Firm today.