How Does The Insurance Company Determine Damages?

If you have been injured in an accident that was not your fault, you may be curious about how the insurance for the other side will compensate you. You have a lot of issues, all happening at once, and you would like to envision a light at the end of the tunnel. What can you expect from the other party's insurance agency? Read on for some guidelines on how insurance companies determine your compensation.


The amount owed to you as a result of an accident is summed up in the word "damages". Your damages are the various costs that can be directly linked to your accident. Common damages in an automobile accident might be:

  1. Your medical treatment, which includes all charges for your care including transportation (life-flight, if necessary), emergency room charges, hospitalization and even extending into continuing physical therapy if necessary.
  2. Your vehicle and other personal property that may have been lost or damaged in the accident, such as a child's car seat or your cell phone.
  3. The time off from your job due to your injuries, including all medical appointments on an on-going basis for your injuries.
  4. Permanent disability caused by the accident.
  5. Mental health issues such as anxiety, depression, relationship problems because of the accident, the effect on your other family members, etc.
  6. Other miscellaneous issues such as planned vacations that could not be canceled, missed classes or training, weddings or other special events that were impacted as a result of the accident.

How Are Damages Computed?

Insurance companies use a mathematical formula to arrive at a ballpark figure to offer you for damages. Make sure that your medical expense figures are accurate, because the insurance company will take the total medical expenses number, which they call "specials" and multiply that amount by a number.

This number depends on how severe your injuries are, and they range from 1.5 up to 5. So, for the most severe injuries they may offer you 5 times your medical expenses to cover the other categories of damages (excluding your vehicle, which is a separate, fixed amount). Your lost income is added to this figure.

Keep in mind that this computation only serves as a general guideline that insurance companies use to present you with the initial offer. You should use this formula to arrive at your own figures.

If the insurance company presents you with a much lower than expected figure and you are finding it difficult to negotiate with them, you need an auto accident attorney. Contact a professional legal representative to assist you in getting a fair settlement for your injuries.