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How Do Insurance Companies Decide How Much To Settle For?

Seth Harris

Last modified on February 13, 2023

How Insurance Companies Calculate Settlement OffersIn order to negotiate a personal injury settlement, you must work with the insurance company of the person who caused your injuries. Understanding the process and how insurance companies typically calculate settlement offers is crucial.

The company’s insurance adjuster will likely investigate the accident independently to determine if their policyholder is liable. They want to determine how the accident occurred and gather evidence to calculate an appropriate value for your claim. However, they also want to avoid paying you and will look for evidence to prove you are at fault or reduce the value of your claim. That is where an experienced lawyer can step in.

Here, you will learn helpful information about how insurance companies calculate settlement offers and how you can enter negotiations feeling prepared and confident in your proposal.

Understanding Personal Injury Compensation

Before learning about the calculation methods, you need to know about the types of compensation available in a personal injury claim. Monetary compensation can include financial expenses like medical bills and non-economic losses like mental anguish.

Financial expenses in accident cases often include:

Non-economic damages involve intangible losses, such as:

  • Loss of enjoyment of life
  • Pain and suffering
  • Emotional distress
  • Scarring or permanent loss of limb

Calculating financial expenses is straightforward. You can refer to invoices, receipts, and other financial documentation. Non-economic losses require more work to determine the monetary value. Although no two cases are alike, insurance carriers often turn to the multiplier method to determine the settlement amount to offer accident victims.

What Is the Multiplier Method?

The multiplier method involves adding someone’s actual accident-related costs and multiplying that number by a multiplier between 1.5 and 5. It is the most common method of calculating a settlement in a personal injury claim.

However, it involves more than adding and multiplying. Determining the most appropriate multiplier to use can be complicated. Although you might think you deserve a 5, the insurance adjuster might believe 1.5 or 2 sufficiently indicates the suffering you experienced after the accident.

With the multiplier method, 1.5 refers to a minor injury with minimal expenses. A 5 can indicate a permanent or disabling condition with extensive financial losses and required future medical care. Choosing 5 while using the multiplier method often means the accident victim’s case-related costs don’t stop when the claim settles. They likely require ongoing treatment to manage chronic pain or deal with permanent impairment or disability.

What Is the Per Diem Method?

The per diem method calculates a daily rate based on the duration of living with the injury and related pain after an accident. The insurance carrier might use this method if your injury prevents you from working.

Determining a settlement according to the per diem method requires calculating the reasonable rate of lost wages after the accident. For example, if you earn $45,000 annually, your daily pay is around $180. If your injury causes pain for five months, multiply $180 by 150, the number of work days in five months, and you get $27,000 as the value of your pain and suffering.

Factors Affecting a Settlement Offer

Calculate Settlement OffersThe insurance adjuster can review various factors related to the accident to determine a settlement to offer. Some factors weigh heavily on the calculated amount. The adjuster might use specific factors to increase or decrease the multiplier they choose using the multiplier method.

The most common factors affecting a settlement include:

  • Documented evidence of your physical and emotional pain and suffering after the accident
  • The nature and severity of your injury
  • Length of the recovery period
  • Type and duration of required medical care
  • Permanent issues caused by the injury, such as an inability to work or perform basic tasks
  • Total medical bills
  • The maximum amount of available insurance coverage
  • Your level of responsibility for the incident
  • Future medical care you need to treat any lingering effects of an injury

Contact Us To Maximize Your Insurance Payout

Negotiating a settlement with the insurance adjuster is often overwhelming. It can be confusing to determine the monetary value of your claim. You should not pursue compensation after an accident without an experienced personal injury attorney. We can help you maximize your settlement offer.

At Harris, Keenan & Goldfarb, we know how to help injured clients recover the settlements they deserve. We will protect your rights and aggressively negotiate a settlement to compensate you for your losses. We have already recovered over $500 million in settlements and awards for our past clients.

Call us at 800-PAIN-LAW for a free consultation if you sustained injuries in an accident due to someone else’s negligence. We are ready to fight by your side for justice.

Over $500 Million in Verdicts and Settlements

Our track record showcases over $500 million won for our clients. Each victory underlines our commitment to justice and client care. Explore our impact, case by case.

VERDICT

$17,500,000

A Brooklyn jury awarded Mr. Vargas $17.5 million for the City of New York’s violation of his civil rights for failing to provide him medical care while in custody. The jury found that the police officers involved failed to provide the necessary medical treatment and awarded $17.5 million to Mr. Vargas.

VERDICT

$4,730,398

Harris Keenan & Goldfarb partners Seth Harris and Sheri Holland obtained a $4,730,398.00 jury verdict on behalf of our client who tripped and fell at a private apartment building in the Bronx, suffering a broken foot that developed a very painful, permanent neurological condition called Reflex Sympathetic Dystrophy (“RSD”).

VERDICT

$12,561,772

A Bronx jury awarded John Doe over $12 million for an accident on a construction site. John Doe was working when a piece of scaffold weighing 35 pounds fell, striking John Doe in the lower back. John Doe suffered a herniated disc requiring surgical removal of a portion of the disc and permanent nerve damage.

VERDICT

$10,500,000

A Bronx jury awarded $10.5 million to the mother of Malcolm Ferguson, who was wrongfully shot and killed by the New York City Police Department. The police officer, Louis Rivera, also a defendant in the case, was found to have used excessive force in violation of Malcolm Ferguson’s civil rights as protected under the United States Constitution.

VERDICT

$4,000,000

A Bronx jury awarded plaintiff William Cardoza $4 million for injuries caused by the use of excessive force during an arrest. During the arrest, Mr. Cardoza was pepper-sprayed and repeatedly hit with a police nightstick. As a result, Mr. Cardoza sustained injuries to his hand and finger.

VERDICT

$3,470,670

The firm’s client, a 33-year-old teacher’s assistant, was scalded by an espresso machine that exploded while the defendant’s employee was demonstrating how the machine worked. The client was a customer at the defendant’s coffee shop on the date of the accident and suffered first-degree burns to her right (dominant) hand.

VERDICT

$4,000,000

The firm represented the mother- decedent and her infant son. During the decedent’s admission to the defendant hospital, the defendant dispensed anesthesia during an epidural to the decedent in an inadequate manner. The mother-decedent suffered personal injuries and wrongful death due to the defendant’s failure to properly administer epidural anesthesia.

VERDICT

$3,823,000

Mr.Brennan fell from approximately 25 feet while working on a construction project. He suffered a shattered bone in his right leg requiring surgery and hardware placement. Mr. Brennan also suffered two fractures in his facial bones, and a dislocated finger requiring surgical repair.

VERDICT

$2,750,000

The firm’s client was a child with cerebral palsy who was injured as a result of medical malpractice. The firm’s clients claimed improper management of pregnancy, labor, and delivery resulting in brain damage, and received a Brooklyn personal injury settlement.

VERDICT

$1,677,835

The firm’s client, a 63-year-old mentally incompetent man, slipped and fell in his own urine while attempting to walk to the bathroom at the defendant’s senior citizen home. The client fractured his hip and as a result is confined to a wheelchair for the rest of his life. The client claimed that the staff of the home failed to properly care for him, and the jury awarded $1,677,835.

VERDICT

$2,995,000

The firm’s client, a 47-year-old male, slipped and fell on a public sidewalk in the Bronx. It had snowed four to five days prior to the date of the accident, and the sidewalk was covered with ice. The client suffered a lumbar fracture and a herniated disc. The jury found the city liable and awarded the client a $2,995,000 personal injury settlement in the Bronx.

VERDICT

$2,610,000

A Bronx jury awarded plaintiff Luis Molina $2.61 million for injuries sustained when he fell down a subway station stairway. Mr. Molina was caused to slip and fall as a result of a plastic bag that had blown onto the steps from a street opening. As a result of the fall, Mr. Molina suffered a herniated disc and a tear of his right shoulder’s rotator cuff. The jury found that the NYC Transit Authority was liable for the accident.

VERDICT

$2,253,714

A Bronx jury awarded Ms. Colon $2.25 million for a trip and fall accident. Ms. Colon was caused to fall when she moved to the right to allow another pedestrian to pass, and her foot rolled to the outside due to the sidewalk being unlevel with the adjoining grass. The jury found the defendant liable and awarded Ms. Colon $2,253,714.00 for her pain and suffering.

VERDICT

$1,900,000

A Brooklyn jury awarded Arvella Floyd $1.9 million for a fractured wrist which required multiple surgeries, including an open-reduction internal fixation and a carpal tunnel release. Ms. Floyd was injured when the hot water knob of the shower fell off after numerous complaints to the superintendent, and scalding water spewed toward her, causing her to
fall and break her wrist.

VERDICT

$1,350,000

A Bronx jury awarded plaintiff Juanita Young $1,350,000 for injuries caused by the use of excessive force during an arrest. During the arrest, Ms. Young, who is legally blind, was handcuffed from behind, with her children watching, and taken to the top of the stairs to exit the building. The officer proceeded to push her down the stairs multiple times.

What Our Clients Say About Us

arien machicotearien machicote
20:55 17 Jul 24
I must say I am extremely happy and amazed at the incredible work at Harris, Keenan & Goldfarb they were always available if I had any questions and they were always answered with very professionallyJason Steinberg is a great lawyer and I will always highly suggest this law firm and team to anyone out their. Thank you again to everyone at this incredible Firm!!!
Cole ColdwaterCole Coldwater
19:36 20 Jun 24
My experience with Harris Keenan and Goldfarb was wonderful. My legal representative, Steven LaRocca with Samantha Walton always made me feel well defended and cared for, in a way that went beyond professional representation and into the realm of caring about me on a personal level. Steven, Samantha and Seth Harris got me a great outcome and I can’t thank them enough!
Jennifer RosarioJennifer Rosario
14:16 05 Jun 24
The best law firm I have ever went with thank you so much
david Santiagodavid Santiago
18:05 21 Mar 24
Maria RoqueMaria Roque
20:49 15 Mar 24
Excellent person, very Professional, they assist you in any language, your call is always answered. I recommend you for any case of support you have, your refund is satisfactory. and fast
S SS S
14:09 02 Mar 24
I am completely satisfied, and recommend Harris Keenan & Goldfarb as Attorneys to represent anyone. Their care for me physically, and overall helped me stay strong in spite of my injuries. Always available to answer questions, and inform.They got me Justice, and achieved a substantial outcome for my case.I am very impressed, and thankful for their outstanding performance on my behalf.I am very pleased, and significantly satisfied with their representation.‐-Sherylon Wilkins
Robert LennonRobert Lennon
15:26 21 Feb 24
Patient and diligence is how I describe the effort of HKG the work was thorough, honest and fair, I have no complaints. Special thanks to attorney Blake and his paralegal Thierry.
Gene Matos (fanboye)Gene Matos (fanboye)
18:48 15 Jan 24
I first crossed paths with Seth Harris when serving jury duty many years ago. He was so professional and personable, that when my mom was seeking legal counsel for medical malpractice, I told her she had to reach out to his firm. We had meetings with a few different firms, but Harris Keenan & Goldfarb was the only firm that did not try to get us to sign paperwork before even meeting. They took the time to listen and understand our situation before we signed anything, and they were transparent and responsive the whole time. I would like to give special thanks to Samantha Walton, Marla Stein, Val Wallace and Seth Harris for helping my mom through this tough time. They were honest and upfront, and even though Seth Harris wasn't personally on the case, he took the time to meet with us and give us his thoughts on it.
Solange IsaacSolange Isaac
17:52 08 Jan 24
I am pleased with the services provided by Ms Sheri on my case. The team at Harris, Keenan, & Goldfarb were very nice and explained everything to me. Everything that I had questions on they answered without frustration and were prompt and knowledgeable.6 years ago I had a slip and fall accident at my employers place of business. I reached out to them because I knew that I was being wrongfully treated. They took care of the case, restored my self confidence, and brought so much peace to my problem riddled life.I can recommend without a shadow of a doubt the services of Harris, Keenan & Goldfarb to anyone who is in need of someone who will have your back!
Brittany DempseyBrittany Dempsey
16:02 08 Jan 24
My mother had an accident with her ankle back in 2019. I immediately contacted Harris, Keenan & Goldfarb on the day of the accident. They were extremely prompt and helpful. They attended to my mother's case beautifully and she's been recovering well. I'd like to thank you for being so diligent, kind and above all professional. I'd recommend this law firm to anyone who are injured and in need of legal assistance. My mother, Andrea, and I thank you for everything.
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Frequently Asked Questions

Common questions that prospective clients have about personal injury claims include:

  • Do I need an attorney?

    When you have suffered an injury, it can be difficult to know what to do next. If the injury was caused by someone else’s negligence, you may be entitled to compensation. However, filing a personal injury claim can be a complex and time-consuming process. An experienced attorney can help you navigate the legal system and fight for the maximum possible compensation.

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