How the Insurance Adjuster Determines an Injury Settlement Offer

How the adjuster came up with the initial settlement offer, and what comes next in an insurance injury settlement.

Updated by , J.D. · University of San Francisco School of Law

If you're negotiating a personal injury claim with an insurance company, you'll probably be dealing with a "claims adjuster." It may be helpful to understand how the adjuster typically operates before you consider (or accept, or reject and counter) a personal injury settlement offer.

Just like an attorney, an insurance adjuster will want to investigate and get a full understanding of the facts of the underlying accident and the claimant's injuries and other losses (called "damages" in legalese). So, what does this kind of investigation involve? What goes into the valuation of the settlement offer, and what comes next in the injury settlement negotiation process?

Investigating the Claim

If you're making a claim with the insurance company of the person you think is responsible for your accident, you're making a "third party" claim.

The first thing the adjuster will want to find out is what the policyholder (that's the person you're saying is at fault for the accident) has to say about what happened.

Besides talking to the insured person to hear his or her story firsthand, the adjuster will read any police report or accident report related to the incident, talk to witnesses, and try to gather evidence (including surveillance video footage).

Investigating the Claimant

Insurers have claims databases that allow adjusters to determine whether the claimant has ever filed a personal injury claim before. A good adjuster will also Google the claimant to do a little background check, and may even hire an investigator to make sure the claim seems legitimate (the claiming isn't saying they have a debilitating back injury, while playing in a competitive soccer league, for example).

Gathering Claim Documentation

The adjuster will contact the claimant (or the claimant's personal injury lawyer) to request documentation relating to the claim. The adjuster will usually request documents such as medical bills, proof of earnings (for lost income claims), tax returns, and proof of property damage.

A good adjuster will go through the documentation with a fine-toothed comb, reading every page of medical records and bills to see if anything is missing, if anything suggests that the claimant has had prior injuries or that the claimant is malingering, or if the claimant's lost earnings claim raises questions. An adjuster will not make a settlement offer and will not respond to a settlement demand without having everything that's necessary to value the personal injury case.

Determining Settlement Value

In order to value the case, the adjuster has to think about two things: 1) what are the claimant's chances of winning at trial if a personal injury lawsuit is filed in court, and 2) how much might a jury award the plaintiff in damages?

Damages are usually divided into two categories: damages capable of exact calculation (medical bills and lost earnings), and damages not capable of exact calculation (including compensation for "pain and suffering"). For medical bills and lost earnings, the adjuster simply does the math.

However, adjusters often discount medical bills if they appear to be "soft," as when the vast majority of medical bills come from health care providers other than physicians and hospitals. If, for example, a plaintiff had $7,000 in medical bills, but $6,500 of that was for chiropractic and physical therapy, the adjuster might cut the medical bill claim in half for valuation purposes. Learn more about how the "right" medical treatment increases the value of an injury claim.

Determining the Value of a Pain and Suffering Claim

This is the real struggle, both for plaintiff's attorneys and for insurance adjusters. But adjusters these days usually use formulas and specialized software to assign a value to pain and suffering claims.

The First Settlement Offer

Once the insurer has arrived at a settlement figure, they must decide what to offer. The first offer is going to be a percentage of what the insurer thinks is the final value of the case. For example, the insurance company may require that the first offer be 40% of the value of the case. There is no industry-wide standard on this. Different insurers have different procedures. Learn more about factors that determine personal injury settlement value.

One very important point is that adjusters often have leeway to adjust the first offer depending on who they are dealing with. If the adjuster is dealing with an unrepresented plaintiff, the first offer will usually be low. (Get the basics on accidents and injury claim settlements.)

How a Lawyer Can Help You Negotiate the Settlement

If you feel that the insurance adjuster isn't taking your claim seriously, or if you're just not confident you can get a fair result to your claim on your own, it might make sense to discuss your situation with an experienced legal professional.

Maybe the other side is denying liability for your accident, and the insurance adjuster is taking the side of their own insured until they see clear evidence that indicates otherwise. This is where a personal injury attorney will conduct their own thorough investigation of the accident, put your best case together, and convince the adjuster to come to the table with a fair offer.

Putting Together a Personal Injury Demand Letter

One of the first things your lawyer will probably do is put together a written demand letter, in which they'll:

  • spell out your version of how the accident happened, and exactly why the adjuster's injured is at fault
  • describe the nature and extent of your injuries resulting from the accident
  • detail the medical treatment you've received from each health care provider (along with an itemized list of the cost of that treatment), and
  • explain the impact that your accident and your injuries have had on your life, including the limitations you're experiencing, and your mental and physical pain and suffering.

Once the adjuster knows they're no longer dealing with a novice claimant, but an experienced lawyer, they're likely to be much more responsive. Get more information on how lawyers decide whether to take a personal injury case, and get tips on finding the right personal injury lawyer.

Next Steps In the Injury Settlement Negotiation Process

Remember that the insurance adjuster's first offer is just the first step in the injury settlement process. Whether or not you decide to get a lawyer's help, your next best step will likely be countering the adjuster's offer with one of your own, ideally as part of a detailed demand letter. Learn more about how much to ask for in your injury demand letter.

After that, it's a matter of understanding the minimum amount you're willing to accept in settlement (remember, once you've settled and signed a release, you can't go back and ask for more money) and your willingness to fight for a fair result. Learn more about how the personal injury settlement negotiation process works. And if you're ready to discuss the prospect of turning your injury claim over to an experienced lawyer, you can use the features on this page to connect with a personal injury attorney near you.

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