Insurance agent going through insurance claim form

How Insurance Companies Evaluate the Value of a Claim

Oleen Law Firm  Feb. 28, 2024

Knowing how insurance companies evaluate claims can significantly impact the outcome of your case. Many insurance companies use a standardized system to determine the value of a claim. However, other factors can come into play, especially since these companies look out for their best interests first.

Understanding these factors can help you navigate the claims process with more confidence and ensure that you receive fair compensation for your losses. 

The Basics of Claim Evaluation  

When you file a claim, the first thing insurance companies do is gather the relevant information. This includes examining medical records, police reports, witness statements, and other supporting evidence. At Oleen Law Firm, we work hand-in-hand with our clients to ensure every piece of documentation is collected and presented in the most compelling way possible.  

Liability Assessment 

The next step of the process is a liability assessment. At this stage, insurers determine who's at fault and to what degree. The outcome of this evaluation directly impacts the amount of compensation you may be awarded. With years of experience under our belts, we know how to build robust cases that prove liability and optimize your chances of receiving fair compensation.  

Damage Assessment 

Once liability has been established, insurance companies then assess the damages incurred. They take into account both economic and non-economic damages: 

  • Economic Damages: These are the quantifiable costs incurred as a direct result of the incident. They can include medical expenses, property damage, lost wages, and potential future earnings loss. Economic damages are typically validated by presenting bills, receipts, and employment records that exhibit the monetary impact of personal injury or loss

  • Non-Economic Damages: Often more subjective, non-economic damages cover the non-monetary aspects of a claim. This includes pain and suffering, emotional distress, loss of enjoyment of life, disability or disfigurement, and loss of companionship or consortium. 

Insurance companies use various methods to evaluate non-economic damages, including the multiplier method and the per diem method. The multiplier method multiplies the total economic damages by a predetermined number. This number can vary depending on factors such as the severity of the injury, the age of the victim, and the potential impact on the victim's daily life. The per diem method calculates compensation based on a set monetary amount for each day the victim experiences pain and suffering. 


After all the evaluations have been made, the insurance company will make an initial settlement offer. In most cases, this offer is lower than what you may have expected or what you believe you are entitled to. This is where negotiations come into play.

Our team of experienced negotiators knows how to leverage strong evidence and legal arguments to get the compensation you deserve. We strive to reach a fair settlement that covers all your damages, both economic and non-economic. 

Other Factors That Can Impact Claim Evaluation 

While the factors mentioned above play a significant role in determining the value of a claim, other elements can come into play as well: 

  • Policy Limits: Insurance companies have limits on how much they will pay for a claim. If your damages exceed these limits, you may only receive the maximum amount outlined in your policy. 

  • Pre-existing Conditions: Insurers may also consider pre-existing conditions when evaluating a claim. They may argue that some of your current injuries were not caused by the incident, and therefore should not be included in the compensation. 

  • Contributory or Comparative Negligence: Depending on the state you live in, your degree of fault may also impact the value of your claim. Some states follow a contributory negligence system where if you are even 1% at fault, you cannot receive any compensation. Other states have comparative negligence laws, where your compensation is reduced based on the percentage of fault attributed to you. 

  • Type of Policy: Different types of insurance policies offer different levels of coverage. For example, a basic liability policy will not provide coverage for damages to your own property, while comprehensive policies may cover all losses regardless of fault. 

It's essential to understand these potential factors and how they may impact the evaluation of your claim.  

Tactics Used by Insurance Companies  

It's important to note that insurance companies often employ various tactics to downplay the value of a claim. They may question the severity of injuries, dispute the necessity of certain medical treatments, or argue that pre-existing conditions contributed to the damages. As seasoned attorneys, we're well-versed in these tactics and know how to counter them effectively. 

Offering a Low Initial Settlement 

One common tactic used by insurance companies is offering a low initial settlement, hoping you'll accept it without fully understanding the true value of your claim. We always advise our clients to be wary of such offers and seek our legal guidance to ensure they're receiving fair compensation. 

Delaying the Process 

Another tactic is delaying the claims process. Insurance companies may request additional documentation, conduct lengthy investigations, or simply drag their feet in the hopes of frustrating you into accepting a lower settlement. Our dedicated legal team is committed to expediting the claims process and holding insurance companies accountable for timely resolutions. 

How Can an Attorney Help Me? 

Working with an experienced attorney can significantly enhance your chances of receiving full and fair compensation after an incident. Here's how an attorney can help: 

  • Interpreting Policy Language: Attorneys have the expertise to comprehend the complex jargon and fine print of insurance policies, helping their clients better understand their coverage. 

  • Building a Strong Case: Attorneys gather evidence, organize documentation, and prepare a compelling claim on your behalf. 

  • Negotiating with Insurance Companies: Lawyers are skilled in negotiation and can advocate for a settlement that accurately reflects the value of your claim. 

  • Challenging Low Settlement Offers: If an insurance company offers an unsatisfactory settlement, an attorney can contest this and insist on a better offer. 

  • Representing You in Court: If it is necessary to take the claim to court, an attorney can represent your interests, providing expert legal advice and litigation services. 

  • Avoiding Pitfalls: An attorney can help you avoid common pitfalls in the claim process, such as providing statements that could be used against you. 

  • Timeline Enforcement: An attorney can help to keep the claims process moving and prevent unnecessary delays by the insurance company, ensuring adherence to statutes of limitations. 

An attorney serves as both a shield and a sword in the battle for fair compensation, advocating for your rights through every step of the claims process. 

Protect Your Interests

Understanding how insurance companies evaluate the value of a claim is crucial for anyone seeking fair compensation. At Oleen Law Firm, we have extensive experience in navigating the complexities of claim evaluation and fighting for our clients' rights. We're committed to providing personalized and effective legal representation to ensure you receive the compensation you deserve.