How do Insurers Value a Personal Injury Claim?

How do Insurers Value a Personal Injury Claim?

Written By: Chris MacDonald and Kate Hunter, Summer Student

Most individuals’ worst fear is getting into an accident. Then comes the difficulties that arise with navigating a claim to get compensation for the injuries and losses caused by the accident. For many, seeking compensation is a necessary step to access the programs, services, and treatments that will help them get back to normal. But how do you ensure that, as a claimant, you get what you are owed? Understanding how insurance companies value an injury claim is an important step to ensuring that you are fairly compensated for the injuries and losses you suffer as a result of an accident.

Generally speaking, the compensation you receive depends upon the nature and severity of your injuries and the other losses caused by the accident. The law does not provide a specific formula for determining the amount of compensation to award for an injury claim. Rather, compensation is dependent on the total value of your damages. Damages are an estimated monetary value of the injuries and losses sustained by a claimant as a result of the wrongful conduct of others.

While money can never truly compensate injured individuals for life-changing permanent injuries and losses, the goal is to provide an injured party with sufficient compensation to allow them to achieve, as best as possible, a return to the relative quality of life they once enjoyed before the accident.

Types of Damages Awarded

There are various types of damages that an individual can claim, which fall under the general categories of “general damages” and “special damages”.

General Damages

General damages, also known as non-pecuniary damages, compensate you for any pain and suffering you will experience now and in the future as a result of the accident. They serve to compensate for injuries or losses that are not quantifiable monetarily, such as physical pain, emotional distress, physical impairment or disability, or a reduction in quality of life.

It was thought that as a matter of public policy there should be a limit to what people can claim as pain and suffering. In 1978, a cap of $100,000, was set. This cap has been adjusted for inflation and in 2022 the max was $409,042.55.

Special Damages

Special damages, otherwise known as pecuniary damages, are damages that are quantifiable and capable of direct calculation. The purpose of special damages is to compensate an individual for specific economic losses caused as a result of an accident.

Special damages include all the past and current losses that can be calculated at the time of the trial or settlement. They include medical expenses, treatment costs, property damage, and other out-of-pocket expenses incurred up to the date of the settlement or judgment. They can also include damages for future cost of care, as well as past and future loss of income.

Unlike pain and suffering damages, there is no limit to what can be awarded for pecuniary losses.

Insurance Companies’ Approach to Assessing Your Personal Injury Claim

After an accident or after you’ve been injured, the first step is to notify your insurance provider. Once notified of a potential claim, an insurance adjuster will get involved. An insurance adjuster will evaluate the terms of your policy and assess your coverage. They will investigate to determine the extent of the insurer’s liability. To that end, the adjuster will seek out various documents related to the claim such as the motor vehicle accident report, a report on the plaintiff’s claim history, medical records, witness statements, and other relevant information. The insurer may conduct web searches and arrange surveillance.

Insurance companies have different approaches to quantifying the dollar value of an individual’s losses. In all likelihood, when initially assessing your claim, an insurer will add up all the expenses related to your injury, all of your special damages, based on their investigation and then multiply that value on a scale from 1.5 to 5. For example, they will add up the cost of your hospital stay, the cost of your totaled car, and the cost of your rehabilitation program, and then multiply that value. When your injuries and losses are relatively minor, they may multiply that value by 1.5 or 2. On the other hand, if the injuries are particularly severe, painful, or long-lasting, these damages could be multiplied by up to 5. This number can go even higher in extreme cases. This is all to say, the more serious of an injury or loss a claimant suffers, the higher the damages will be to compensate for higher medical expenses and greater pain and suffering.

The figure that adjusters calculate is only a starting point. The insurer will likely look at the nature and severity of the injuries, the disruption to daily life, and the degree of fault attributable to the other individual or individuals involved in the accident to further quantify a value. The insurer may add other types of damages they anticipate may be claimed. After these numbers are determined, early settlement discussions may occur depending on the circumstances of the claim.

Claimants should take note that insurance adjusters naturally attempt to decrease the compensation offered to minimize the loss on their end. An insurer wants to get as much information on the claim as possible to determine whether the insured is liable. They will be looking for any evidence that the claimant’s actions contributed to the accident and their resultant injuries. If they find that the claimant somehow contributed to their injuries or their severity, this will lessen the amount of damages a claimant will be awarded. For example, if you fail to wear a seatbelt and are subsequently injured in a motor vehicle collision, you can be held liable for the extent of your injuries that were aggravated as a product of you not wearing your seatbelt. If the insurer finds a degree of fault on behalf of the claimant, they will make efforts to ensure they are only liable for the portion of their insured client’s fault.

There will often be disagreement between the claimant and the insurer on the value of a claim, liability, or the apportionment of fault. In such cases, the next step for a claimant is often to contact a lawyer and commence a civil action. While there is no requirement that a claimant hire a lawyer to commence legal action, hiring an experienced lawyer to help you navigate the process will help ensure your interests are best protected.

The Value of an Experienced Personal Injury Lawyer

An experienced personal injury lawyer can help you navigate the insurance claim process. Often, there are strict deadlines and tight timelines claimants must follow and be aware of. Hiring a personal injury lawyer is a good way to advance your claim efficiently and avoid delays and possible disqualification from benefits you may be entitled to as a result of the accident.

A personal injury lawyer will investigate your claim and gather evidence to help you build a strong case. An experienced lawyer can evaluate the strengths and weaknesses of your case and give you guidance on your claim’s value. Once you have an idea of your claim’s potential value, your lawyer can assist you in dealing and negotiating with your insurance company and defence counsel as your claim progresses. They can communicate with adjusters and opposing lawyers, and canvas options for a resolution.

Consulting a personal injury lawyer an important step to ensure you maximize the compensation available for your particular claim.

Chris MacDonald


Book a FREE Consultation

To start your free consultation, fill out the form below.

Free Consultation Form