Accident FAQ: How Do Insurance Companies Determine Settlement Amounts?

Six million dollars. Ten million dollars. Commercials for personal injury attorneys may make it seem like getting a large accident settlement is a cakewalk. While a good attorney can make all the difference in how much you get after your accident, an insurance company’s processes also play a big role. Insurance companies are working for their client and will typically go above and beyond to limit how much they have to pay out. Understanding their processes can help you get a realistic idea of how much of a settlement to expect after you’ve been in an accident.

What is a Settlement?

Broadly speaking, a settlement is a legal agreement that resolves a conflict. In the setting of a car accident, a settlement is designed to resolve the conflict between an injured party and an at-fault driver who doesn’t want to go to court. A typical settlement will provide enough money for:

  • Hospital bills
  • Ongoing treatment
  • Lost wages

Settlements can be reached by working with an insurance company or having a personal injury attorney do so. An adjuster will work for the insurance company, considering the facts and evidence before making a monetary offer to the wronged party. Adjusters consider things like documented expenses, lost wages and income and permanent disability as they determine how much they think the victim should be offered. Typically, they will consider if the plaintiff has a weak case or a strong one. If they are likely to win in court, the adjuster may suggest a higher settlement and vice versa for a weak case. Having an attorney can help influence this settlement amount.

How Settlement Amounts Are Determined

Adjustors don’t simply pull settlement amounts from the thin air. Instead, they add up documented expenses like the cost of an ambulance ride, or doctors bills. In the case of less tangible things like pain and suffering, they may estimate damages using one of two methods:

  • A per diem method which assigns a value for each day of victim suffering multiplied by the total number of days
  • A pain multiplier system, in which the amount of medical bills and lost wages is multiplied by a set number

Whatever method an insurance adjuster uses to determine the value of your claim one thing is certain: They want to pay you the least possible – often far less than you need. Don’t be tricked.Contact a personal injury attorney to negotiate on your behalf and get a settlement that makes sense.

Source: Personal Injury Attorney Scottsdale, AZ, Yearin Law Office

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