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How Insurance Companies Decide on a Settlement Amount after a Personal Injury Accident


Being a victim of a personal injury accident can be a long and tedious process. In order to make the process easier, it’s important to understand how an insurance company decides on a reasonable settlement amount.

After an accident has occurred, the insurance claim adjuster will make an initial settlement offer in hopes of avoiding the case going to court. It’s important to understand what a claim adjuster is, and what their interests actually are.

What is an insurance adjuster?

An insurance adjuster is a person who works for the insurance company whose job is to determine the value of a claim. Remember, they work for the insurance company, so naturally their desire is to settle for the least amount possible.

This is precisely the reason why initial settlement offers are usually so low. But the adjuster also hopes to settle the case outside of court to avoid the costly process, and this is why it’s important to be able to properly negotiate with them to maximize your compensation amount.

The adjuster will routinely listen to both sides of the story, review the police report, and look into the personal history of both parties to see if there is any information that can be used against them.

Remember, the insurance adjuster is not on your side, and you shouldn’t have to deal with them alone. Hiring an experienced personal injury law firm like The Law Offices of Michael A. Rabban will help you avoid the hassle of dealing with adjusters on your own and will ensure that you’re protected in the process to maximize the potential outcome and value of your case.

What Factors Does the Adjuster Consider?

After due diligence has been completed on the account of the insurance adjuster, they will use their system to decide on a fair settlement offer. The main factors taken into consideration are:

  • Documented expenses (medical bills, property damage) that have resulted from the accident.
  • Loss of wages and income (past, present, and future)
  • Pain and Suffering Damages
  • Permanent physical disability or disfigurement
  • Emotional Damages

After doing their research, if the insurance adjuster believes you have a strong case they will make you a higher settlement offer. If they believe your case is weak, they will offer you a much lower amount or deny your injury claim altogether.

How is the Settlement Amount Calculated?

There are two standard systems insurance adjusters generally use to calculate damages: 1) per diem system 2) pain multiplier system.

In a Per Diem system, the insurance company will determine a value for each day that the victim suffered, and multiply it by the total number of days of suffering.

In a Pain Multiplier System, the insurance company multiplies the amount of money from medical bills and lost wages by a number between 1.5 and 5.

The insured’s policy limits are also taken into consideration when calculating the settlement offer.

How can hiring a personal injury attorney help with the process?

If you’ve been involved in a personal injury accident, it’s important for you to get the fair compensation you deserve. Hiring an experienced lawyer can help you so you don’t get taken advantage of by insurance companies.

An experienced lawyer will know all of the nuances of dealing with insurance companies to negotiate properly with the insurance providers. For successful negotiations, it’s important to build your case properly so you have a strong claim and can maximize your settlement.

By hiring a professional personal injury lawyer, you’re showing the insurance adjuster that you’re serious about your case and that you’re not willing to settle for a low amount. An experienced lawyer will fight for you and is able to speak the language of car insurance companies.

If you’ve been involved in an accident and believe it was not your fault, be sure to contact The Law Offices of Michael A. Rabban for a free consultation about your personal injury case at 818-272-8882.

No fee, no risk promise: we don’t get paid until you win.


Schedule a free case evaluation: (818) 272-8882


Michael A. Rabban

Attorney at Law


Michael A. Rabban has been regarded as one of the best Personal Injury lawyers in Los Angeles.

In 2009, he founded a very successful law practice that quickly garnered the respect of clients and peers alike.

He has handled cases involving work related accidents, car accidents, and many premises liability cases such as Slip and fall accidents, dog bite, and negligent security cases. To Michael, it had always been a life time dream to establish a practice who's mission was to treat each and every one of his clients with care, dignity and respect. He strives to afford every one of his cases, no matter how big or small, the time, effort and attention he or she deserves. He lives and breathes by the mantra that no person is without rights.

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I know many attorneys and was having a hard time deciding who to use. I was fortunate enough to make a great choice and pick Mr. Rabban to represent me. He is professional, knowledgeable, personable, and took the time to answer all questions. He would follow-up with me regularly and pay close attention to the details of my personal case. The outcome of his hard-work paid off and I thank him for that. I strongly suggest him to everyone seeking counsel.


David M.

Los Angeles

You’re not alone. We’re here to help.

No fee, no risk promise: we don’t get paid until you win.


Schedule a free case evaluation: (818) 272-8882