When determining the value of a claim, insurance companies rely on the existence of a special sort of device. It is a formula. It provides the insurance company with a definite point from which to begin, when seeking a determination of a given claim’s value.
The figures in the formula
• The special damages: the medical expenses and the claimant’s loss of income.
• The general damages: the value for the pain and suffering; the value for any missed experiences, or lost opportunities
• The total cost of the medical expenses comes to an exact figure.
• The extent of the plaintiff’s loss of income can be expressed by using a precise number.
There is no precise number for the claimant’s pain and suffering. By the same token, there is no precise number for value of the missed experiences and lost opportunities. The special damages become one of 2 factors in a multiplication procedure. The insurer has selected the other factor. That second factor usually falls between 1.5 and 5.
The insurer’s selected number represents the insurer’s estimate of the claim’s value. If the claim’s value is low, the factor placed in the formula by the insurance company is between 1.5 and 3. On the other hand, if the claim’s value is high, then a figure of 4, 5, or possibly more gets placed in the insurance company’s formula.
The multiplication procedure provides the adjuster with a number that should be added to the size of the plaintiff’s lost income. The addition of the 2 numbers, the product from the multiplication procedure and the value for the lost income, provide the insurance adjuster with a number that he or she can use.
How does the adjuster put that number to use? That particular number represents an amount of money. When the adjuster negotiates with the plaintiff’s lawyer, the 2 negotiators need to put forward specific monetary offers. After an offer has been made, the opposing side has the chance to accept it or reject it. Many adjusters start their settlement negotiations by introducing the figure that was obtained by using the insurance company’s formula. The personal injury lawyers in Okotoks of the opposing party must compare that starting figure with the number that represents the lowest offer that the plaintiff/opposing party feels willing to accept.
The formula’s effect on the plaintiff’s thinking
Suppose that the adjuster starts negotiations with a figure that is close to the plaintiff’s lowest acceptable offer. If that were to happen, then the plaintiff would have to re-think the wisdom of sticking with that same number. Suppose, though that the adjuster started negotiations with something that exceeded greatly the plaintiff’s lowest acceptable offer. Then the plaintiff should think about raising the size of the next asking price.