How Insurance Companies Determine Personal Injury Settlements

How Insurance Companies Determine Personal Injury Settlements

Although each legal case has unique and distinct aspects, there are generally specifics that allow insurance carriers and the courts to group most of the cases in categories. Each category would then allow for specific compensation amounts, damages, and sometimes exceptional monetary additions. Although the details can not be specific, here is a way that most insurance companies determine personal injury settlements.


If you prove your case, your claim will be worth a certain amount of money under the law. You must prove what losses or damages you incurred, and then each of those is given a value or dollar amount according to the insurance company’s compensation formula. These damages may include:

  • Permanent disability
  • Medical expenses
  • Damaged property
  • Lost income
  • Long-term care

There is an additional compensation category called “pain and suffering” that deals with details of life that don’t have physical records to back up the problems associated with the injury. This includes emotional and mental suffering, and depression as results of the damage.


It is easy to calculate the money spent or wages lost, but it is more challenging to determine the missed family time, lost opportunities, or ongoing pain. So, the insurance industry came up with a formula they use to calculate damages. The amount of all medical expenses is added together and multiplied by different amounts for different injuries. These are:

  • 5 for minor injuries
  • 3 for complicated minor injuries
  • 5 for long-lasting injuries
  • 8 for severe, painful, and long-lasting injuries
  • 10 for extreme cases

Once the amount for expenses is computed, lost wages are added onto the final amount. Although the insurance agent will offer this amount to victims, most attorneys believe this is only a starting point that creates the opening where negotiations can begin.


Most insurance companies rely on the fault of the individual as a basis of how willing the company is to negotiate the compensation amount up or down. Comparative fault allows the agent to place a portion of the blame for the accident on the injured party, thus reducing the final offered amount for settlement. Fault can be very difficult to determine, and this is where a good lawyer can be invaluable in defending your case.

Finding compensation for injuries would be simple if all cases were the same, but since they are not, it is easy to see how difficult the problem of determining damages can be. If you or a loved one have been injured in an accident, contact a lawyer, like a personal injury lawyer in Canoga Park, CA from Unidos Legales, as soon as possible.