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How Insurers Determine a Car Accident Settlement Offer?


If you find yourself involved in a car accident, you may need to negotiate a personal injury claim with an insurance carrier.

Specifically, you will deal with a claims adjuster working at the insurance company.

So, before you start drafting letters of demand, or thinking about accepting or rejecting any settlement offer, it pays to learn how claims adjusters typically operate. The more you know about this process, the more chance you can obtain a fair and favorable settlement.

Insurance adjusters will aim to get as full an understanding as possible of the facts surrounding the underlying accident, as well as any injuries to the claimant, and other losses (collectively termed “damages”.)

How, precisely, do insurance claims adjusters conduct their investigations, then?

Hearing the Insured Party’s Version of Events

You will seldom make a claim with the person directly responsible for your accident and will be much more likely to make a third-party claim against the insurance company of the person you feel was responsible for your accident and subsequent losses or injuries.

When you make a third-party claim, the adjuster will first want to hear what the policyholder – the person you allege is culpable for the accident – has to say concerning what happened.

As well as speaking with the policyholder for a first-hand account of events, adjusters will also consult any relevant accident reports or police reports pertaining to the incident.

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Investigation into the Claimant

All insurance companies have robust claims databases. The adjuster can easily determine whether the claim has previously filed a personal injury claim.

Many loss adjusters also conduct a thorough online search to find any incriminating information concerning the plaintiff.

Requesting Documentation Related to the Claim

The claims adjuster contacts the claimant or the claimant’s attorney to introduce himself and request all relevant documentation related to the claim. Adjusters will usually request the following:

  • Medical bills
  • Proof of damage to property
  • Tax returns
  • Proof of earnings

Good claims adjusters will scour this documentation for any possible oversights, checking all medical bills and records closely. If there is any suggestion that the claimant is malingering, or if anything points toward injuries sustained prior to the incident, the adjuster will not make a settlement offer. Beyond this, the adjuster will not respond to any settlement demand either until everything they have requested is in place and as it should be.

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Determining the Settlement Value

Claims adjusters consider two factors when valuing your case:

1. Your likelihood of winning at trial if you file a personal injury lawsuit in court.

2. The likely value a jury might award you in damages.

Damages are typically categorized as either:

  • Damages that can be precisely calculated (lost earnings, medical bills)
  • Damages that cannot be precisely calculated (pain and suffering)

The first of those categories of damages is calculated using pure math. The exception here is that some medical bills will be discounted if they appear to come predominantly from providers other than hospitals or physicians. If the majority of the medical bills stem from physical therapy and chiropractic, for instance, the medical bill claim will commonly be slashed in half for the purposes of valuing a personal injury claim.

The second category of damages are more nuanced and less straightforward to calculate.

Establishing the Value of a Claim for Pain and Suffering

Placing a fair value on pain and suffering is an uphill struggle, both for your attorney and for the claims adjuster at the insurance company.

While this element of the claim calculation may seem more subjective, it will still be calculated using specialized software and formulae where pain and suffering claims are assigned dollar values.

With these elements considered, you can expect to receive an initial settlement offer from the funding company, assuming your application is successful.

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The Initial Settlement Offer

When the claims adjuster has arrived at a figure for settlement, they need to decide what to offer you.

The first offer you receive will be a percentage of what the insurer feels will be the final value of your case. Different insurers have different working minimums, 40% of the value of the case being widespread despite the lack of any specific industry standard.

You are under no obligation to accept this initial offer – indeed, you should only do so if you and your attorney feel it is fair – and most claims adjusters will have considerable latitude to adjust the initial offer.

In closing, note that insurance companies tend to make lowball initial offers to unrepresented plaintiffs, so retain an experienced personal injury lawyer to help you get the compensation you deserve.

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