How Does an Insurance Company Decide How Much To Pay?

By September 24, 2013Personal Injury Blog

insurance pay out calculationWhen you are injured in a car accident, it seems as though you have enough difficulties without having to fight to have your injuries paid for by the insurance company. Unfortunately, though, you will probably have to contend with an insurance company after an accident, whether it’s someone else’s company, or whether it’s the company that provides your liability insurance coverage.

Understanding how an insurance company compensates for injuries can be a good first step in getting a handle on your situation — and realizing how helpful hiring a personal injury lawyer can be in dealing with the insurance company.

Which Injuries Can You Be Compensated For?

Your first step is to understand which injuries the insurance company will pay for. Liability coverage is meant to take care of medical care and related expenses, as well as replace income lost as a result of an accident (since you might not be able to go to work). If you are permanently injured or disfigured, an insurance company is supposed to take that into account as well.

Other injuries might be a little harder to compensate for, but the insurance company is supposed to pay for their costs as well. These injuries include loss of various experiences related to family, social, and education opportunities — including the fact that your accident might interfere with a vacation. You are also eligible for emotional and mental damages suffered, including anxiety and strain on your relationships.

If the car accident caused an injury to you, there’s a good chance that you are eligible to receive damages from the company of whoever was at fault.

How Much Will You Get from the Insurance Formula?

insurance pay out formulaEven though you have injuries, you don’t get to decide how much they are “worth.” Instead, the insurance company uses a damages formula. For actual medical attention you receive, this process is fairly straightforward: The dollar amounts spent on your care are pretty easy to tote up. These damages are often called “special.”

What’s difficult it placing a value on your pain and suffering, ongoing mental and emotional health issues as a result of the accident, and the experiences you might have missed. These are “general” damages. Often, the dollar amount for your special damages are used as a starting point and a guide to determine the degree to which you are likely to suffer from the “general” injuries.

For instance, if you have minor injuries, an insurance company adjuster might multiply your special damages by two to come with a total amount of damages. The greater your injuries, and the longer your recovery, the higher the multiplier. While most insurance companies stop at five, in extreme cases they might go higher.

Once the damages are figured, the lost income is added in for a total amount. However, that’s not all. If you are considered at least partly at fault, you might see a deduction in the amount paid to you. Even though the accident is caused by someone else, the insurance company might decide that you didn’t try hard enough to avoid the accident, and say that you are 20% at fault — and deduct from your damages accordingly.

The dollar amount the insurance company places on your injuries might not an accurate representation of what you should really have. This is why it’s important to get a lawyer. A personal injury lawyer is on your side, and can fight to make sure that your compensation is consistent with your injuries — and the additional problems they cause. Don’t try to deal with the insurance company yourself; hire a good personal injury attorney who can fight on your behalf to make sure you are treated fairly.


Bighorn Staff

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