The Damage Formula Insurance Companies Use to Calculate Compensation

When determining compensation, calculating money spent and money lost is easy. However, there is no precise way to place a dollar figure on the cost of pain and suffering, loss of opportunities and experiences. This discrepancy is where the insurance formula of an insurance company comes into play.

At the start of the claims negotiations, an insurance adjuster totals the medical expenses related to the injury. These expenses are called “special medical damages” or simply “special.” This is the basis that an insurance adjuster uses to calculate the amount paid to the person injured by the pain, suffering and other non-monetary losses, which are called general damages.

When the injuries are relatively minor, the adjuster multiplies the number of special damages by 1.5 or 2. When the injuries are particularly painful, severe or long-lasting, the adjuster multiplies the amount of the special damages above 5. (The multiplication can be as large as 10 in extreme cases). A capable personal injury attorney from Miami could answer any questions an individual may have about the formula that insurance companies use to calculate compensation.

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