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How Do Insurance Companies Come Up With a Settlement Offer

Recovery after a car accident is challenging, especially when your injuries and property loss are severe. You may not be able to work or be social for some time after the accident while you recover. Unfortunately, there is no hard-and-fast rule for compensating pain and suffering. However, insurance companies do have formulas and algorithms to help them make what they consider fair settlement offers to victims of accidents.

1. Using Tangible Amounts and Multiplication

The first method insurance companies may use through the use of tangible amounts and multiplication. An insurance adjuster will compile a list of records to determine the financial cost of the accident for the injured party. The sum of those losses is then multiplied by a number, usually between one and five, depending on the severity of the injuries and damage.

The number that the sum is multiplied by is the insurer’s way of compensating the injured party for their pain and suffering. Unfortunately, this way of calculating damages is not always the most accurate or beneficial for accident victims, which is why you should always have an attorney to help you through the settlement negotiations.

2. Using a Per Day Rate

Many insurance companies use a per day rate for crash survivors. Essentially, a company has a given number that is then multiplied by the number of days it takes for a victim to recover. Unfortunately, this calculation method favors individuals with recoverable and no permanent injuries.

3. Computer Algorithms

With most insurance companies relying on computer entries and data analytics, it is no surprise that the human element is often removed from the settlement calculation methods. Insurance representatives simply enter financial data and hit sum to come up with what they assume to be a fair settlement offer.

4. Negotiations

It is not often that an insurer comes to the negotiating table with a fair offer. Many times, the company will start with a small amount fully anticipating a counter offer. Having an attorney in your corner helps to ensure that you do not accept a settlement for less than what your claim is worth.

Unfortunately, there is no simple rule for determining how much your claim is worth, and every insurance company likely deals with proprietary algorithms to assess their offers. If you are concerned about receiving a fair settlement offer, then consider reaching out to a personal injury lawyer in Canoga Park, CA, such as from Unidos Legales, to discuss the merits of your claims.