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The insurance adjuster responds to the claimant’s demand letter with an initial offer. Insurance companies use a formula, in order to estimate the value of a submitted claim.
Damages considered by those using the formula
Special damages: These are also called economic damages. The claimant might have viewed them as out-of-pocket costs. Both the medical expenses and the lost wages get counted as special damages.
General damages: These have arisen from the claimant’s attempt to deal with emotional issues, such as distress, depression, and anxiety, along with pain and suffering. Other general damages could enter the picture, as well. For instance, the Personal Injury Lawyer in Hamilton knows that the claimant might seek funds to cover the cost of future medical care. Alternatively, the claimant might develop a disability, or become disfigured.
Specific losses are one factor in the formula.
The formula calls for the multiplication of 2 factors: One is the value of the specific losses; the other is a multiplier. Figures and circumstances that determine the number used as the multiplier, a number that is usually between 1.5 and 5. The circumstances that are considered include:
• The number of medical bills received by the claimant
• Does evidence indicate that the treatment was necessary?
• Did the claimant have any pre-existing conditions?
• Has the claimant sought a permanent treatment?
• Was there evidence of comparative negligence on the part of the claimant?
How do insurance companies utilize the figure obtained by using the formula?
By multiplying the 2 factors in the formula, the insurer manages to obtain an approximation of a given case’s value. In order to make that approximation a more accurate estimate, the product of the multiplication should be added to the amount that represents the value for the claimant’s lost wages.
What then does the insurer do with that more accurate estimation? The insurer shares that figure with the adjuster. After being told that figure, the adjuster becomes ready to make an initial offer, when opening negotiations with the designated claimant.
At that point, the designated claimant has already provided the adjuster with a demand letter. The claimant has made that demand without using any sort of formula. Still, the claimant can discover how close the submitted demand has come to the case’s true value. Claimants can look for a similarity in the two figures by learning the adjuster’s initial offer.
If that initial offer happens to be close to the figure in the claimant’s demand letter, then the claimant should re-think his or her view of the case’s value. If the demand is close to the opening offer, then one fact becomes obvious. The claimant ought to re-consider the value of the proposed offer that he or she plans to accept. That acceptable offer should have a higher value.