How an insurance company decides what your claim is worth

People usually expect an insurance company to work out what a claim is worth by asking what the accident did to them. That is not how it happens. An adjuster starts with a file, a set of numbers and a piece of software, and the human part of it only enters if someone puts it there.

Understanding how that valuation is built is the difference between accepting the first offer and knowing why it is low.

This article describes how insurers generally approach a valuation. It is not legal advice about your situation, and reading it does not make you a client of the firm.

It starts with the medical bills, because those are the easy part

The first number in any injury claim is the cost of treatment. It is easy to prove, easy to total up and hard to argue about, so it is where an adjuster starts.

That total is then adjusted. Treatment the adjuster considers excessive gets stripped out. Chiropractic care and physical therapy are frequently reduced on the basis that too many sessions were billed. Anything that looks unrelated to the accident is removed.

Then comes lost income, which is also documented and also easy to check.

So far, so mechanical. If the claim stopped there, it would be a bookkeeping exercise.

Then comes the part they would rather keep small

The rest of the claim is everything the accident did to you that does not arrive with an invoice. Pain. Difficulty sleeping. Not being able to lift your child. Giving up something you did every weekend. A scar. Anxiety about driving.

In a New Jersey or New York claim this is a genuine, recoverable part of the loss. It is also the part with no receipt attached, which means it is the part an insurer has the most room to minimize — and the part that is worth the most in a serious case.

Many insurers run the claim through software that produces a range based on the diagnosis codes, the treatment and the documentation in the file. If the effect on your life is not written down anywhere, the software does not see it, and neither does the adjuster.

What actually moves the number

A handful of things make a real difference, and most of them are decided in the first few months.

Whether fault is disputed. If the adjuster thinks there is an argument that you were partly responsible, the valuation drops accordingly. Both New York and New Jersey reduce a recovery by the injured person’s share of the blame, so an argument about fault is an argument about money.

How the injury is documented. Objective findings carry weight. An MRI showing a herniated disc is treated differently from a note recording that a patient reported back pain. This is not fair, but it is how the file is read.

Whether treatment was continuous. Gaps get used as evidence that the injury resolved, whatever the reason for the gap.

The available insurance. A claim is often worth what the policy will pay. This is why identifying every possible insurer matters — the driver, their employer if they were working, an additional policy, your own underinsured motorist coverage.

Whether the file looks ready to be tried. An adjuster who can see the case has been properly worked up, with records obtained and experts lined up, values it differently from one that looks like it will settle for whatever is offered.

Why the first offer is usually low

Because it is early, and because early is when they know least about how you will turn out and when you are most likely to say yes.

An offer that arrives before you have finished treatment is an offer made without knowing whether you will need surgery, whether the pain will settle, or whether you will get back to full-time work. Once you accept and sign the release, that is the end of it. If you need an operation a year later, there is nothing left to claim.

This is the single most expensive mistake people make in injury claims, and it is made by people acting reasonably — the bills are arriving and the money is there now.

What you can do about it

Finish your treatment, or at least get to the point where a doctor can say where you are likely to end up.

Keep a record of what you cannot do. It is the part of the claim with no paperwork, so you have to create the paperwork.

Do not give a recorded statement or sign a broad medical authorization without understanding what it covers.

And get someone to look at it before you accept anything. At Hunt Injury Law, our attorneys came from the other side of these claims — Big Law, corporate defense and insurance defense in New York City — which means we can usually tell you how a file has been valued and why.

Worth saying plainly

Nobody can tell you what your case is worth from a website, and anyone who does is guessing. What a lawyer can do is tell you what is missing from the file, what an insurer is likely to argue, and whether the offer in front of you reflects the whole loss or only the part with a receipt.

There is no cost to ask. Call 866-456-HUNT or tell us what happened, and you pay nothing unless we recover money for you.