How do Insurance Companies Create a Monetary Value for Injuries?

When you suffer injuries due to the fault of another, one of the first things you should do, after seeking medical attention, is determine whether or not you should bring suit against the person(s) responsible.

To do this, you will need some idea of what your personal injury case is worth. If you stand to recover very little, suing may not be worth the hassle.

Typically, when an individual consults with an attorney regarding a possible personal injury suit, he or she is still receiving medical treatment for injuries. At this stage, no personal injury attorney can honestly say how much your case is worth.

This is because a large part of the award you may receive will depend upon the ultimate cost of your medical care and your long-term prognosis, both of which will still be undetermined.

Nonetheless, it may be helpful to have a look at how insurance companies go about creating a monetary value for injuries.

Valuing Your Personal injury Claim

The most significant considerations an insurance company has to make in determining the monetary value for your injuries is 1) the types of damages that you can claim and 2) to what extent their client is actually liable for your injuries.

Damages

There are various kinds of damages that a plaintiff may request in a normal personal injury case. The damages for the specific losses and the negative effects of the accident upon the injured plaintiff can be split into two primary categories—economic damages and non-economic damages, which are also referred to as “special” damages and “general” damages, respectively.

Economic (Special Damages)
Economic damages or “special damages”, as they are referred to, are those sorts of damages which have an obvious dollar amount associated with them. The main types of economic damages in personal injury cases are medical expenses, lost wages/lost earnings, loss of earning capacity and property damage.

The principal characteristic of economic damages that distinguishes them from non-economic damages is that they are readily calculated. Quite simply, we can point to a medical bill and calculate how much money was lost. We can point to lost wages and calculate how much income we missed. And, we can point to a damaged car and calculate how much it cost to repair or replace it.

Economic damages—such as in the loss of earning capacity—might not always be easy to calculate, but they are based on calculable figures. So, an economist can calculate approximately how much an individual could have earned in their lifetime had they not been disabled by an injury.

Non-Economic Damages
On the other hand, non-economic damages are significantly more difficult to value. Non-economic damages incorporate things like pain and suffering, loss of enjoyment of life, mental anguish, scarring, loss of consortium and associated damages that might have different names in a variety of states. The insurance provider cannot look to any formula or measurement or price book to see the amount of money they should give a plaintiff to compensate him or her for the pain and suffering experienced as a result of an accident. The insurance company is left completely to their own opinions, life experiences, judgments and intuitions in arriving at an amount.

Consequently, it is typically more difficult for an insurer to determine how much money to offer a plaintiff for non-economic damages—such as pain and suffering, loss of enjoyment of life, mental anguish and loss of consortium—than it is for them to decide how much to give for medical and wage losses.

Liability

Another important consideration an insurance company will look at before valuing your injuries is how much, if any, their client was at fault for your injuries and what percentage, if any, you were at fault.

In Louisiana, the value of your personal injury claim will be reduced by the value of your own percentage of fault for the accident in which you were injured. So, if you are found to be 20% percent at fault, you will be entitled to only 80% percent of your damages as compensation.

So for instance, if the total monetary value of your injuries and losses is calculated to be $100,000 and you are found to be 20% at fault for the accident in which you were injured, the insurance company will value your claim at $80,000 ($100,000 minus 20%).

An experienced personal injury attorney can assist you in finding out how much your injuries are worth. Contact Herman, Herman & Katz, LLC Attorneys at Law today regarding your injuries. We will assess your case for free and help determine how much compensation you may be entitled to. Call us at 844-285-0267 to schedule a consultation or contact us online with your questions.