ADVICE FROM CONSUMER ADVOCATE STAN GREYSON
Valuing Your Personal Injury Claim
HOW INSURANCE COMPANY WILL VALUE YOUR INJURIES
There are various industry norms when valuing personal injury cases. Insurance companies typically must compensate the injured party for medical treatment, lost income, permanent disabilities and disfigurement, loss of experiences (family, social, educational), pain and suffering, and property damage. Most insurance adjusters follow a similar set of procedures to determine how much an accident victim should be paid. It is important to understand these norms and procedures when deciding whether or not to proceed with a claim, accept a settlement, or go to trial.
In general, an insurance adjuster will take the total cost of a victim’s medical expenses (called medical special damages or specials) and use that number to determine how much the insurance company should pay for pain and suffering and other non-monetary damages. For minor injuries, an adjuster will multiply the medical special damages by 1.5 or 2, but for more serious or prolonged injuries the multiplier is usually around 5. Then the adjuster adds lost income to the total. The resulting number is usually where the insurance company will begin its negotiations. Of course, in many cases, the fault is not always clear cut. In fact, it is very likely that some fault for the accident lies with you. The adjuster will attempt to determine a percentage of comparative faults and reduce the total by that percentage.
Another important consideration when negotiating the value of a personal injury claim is how the settlement will be taxed. You should consult your tax advisor, but in general personal injury settlements related to physical injuries are tax-free. Payments for non-physical injuries such as emotional distress, insomnia, headaches, and stomachaches are usually taxable. Once you have determined how each part of your settlement will be taxed you can negotiate accordingly to minimize your tax liability.
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