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How Do Auto Insurers Evaluate Personal Injury Claims?

Massachusetts personal injury attorney James M. Lynch discusses how auto insurers evaluate personal injury claims after an accident.

Generally speaking, car accident personal injury claims are not ripe for settlement until accident victims have reached a medical end point. Most of the time that occurs when the injured person is discharged from all medical treatment. Not long after that, all of the available data are submitted to the insurer as part of the settlement demand.

Not surprisingly, the 5 factors that the insurer will look at are the same factors that a jury would look at in a trial of the claim. They are as follows:

  • Total Medical Bills.
  • Lost Earnings Capacity.
  • Periods of Total Disability.
  • Periods of Partial Disability.
  • Permanent Impairment/Loss of Function.

It should be noted at the outset, that this article deals with damages only and not the elements of liability or the causal relationship between fault and damages. Those elements are assumed for purposes of this discussion but they are also considered by juries and insurers and if, for example, the injured person bears some of the blame for the accident. (The topics of comparative negligence and causality – and how they factor into the value of a case – will be the subject of a future blog.)

The 5 Factors: What Auto Insurers Look Examine

The damages considerations are broken down more fully below:

  1. Total Medical Bills. The very first thing the insurer would look at are all of the medical bills generated that were reasonable and necessary. Those bills include charges for ambulance services, hospital treatment, diagnostic testing like x-rays, CT and MRI scans, doctor office visits, physical therapy and chiropractor treatment, dental expenses and funeral expenses. The amount of medical bills incurred cannot be exaggerated and insurers generally accept them unless they have good evidence that the injured person over treated.
  2. Lost Earnings Capacity. The easiest way to demonstrate lost earnings capacity is by showing actual time lost from work. That is accomplished by written documentation consisting of a statement from an employer outlining the amount of time and lost wages along with a note or letter from a doctor saying that the patient was totally disabled from working. Self-employed claimants have a much more difficult time demonstrating lost earnings capacity.
  3. Periods of Total Disability. The amount of time a person is totally disabled from performing his/her activities of daily living (ADLs) is what constitutes periods of total disability. The person who assesses total disability is the doctor in charge of the ongoing care – either the primary care physician or the specialist (orthopedic or neurological). Obviously, the length of total disability has a lot to do with the overall settlement value of the case.
  4. Periods of Partial Disability. The amount of time a person is partially disabled from performing his/her ADLs is what constitutes periods of partial disability. Very often that means that a person is restricted, pursuant to a doctor’s order, in performing ADL’s, such as bending, kneeling, squatting, lifting, climbing stairs or ladders, or performing repetitive motions. Insurers also generally view the length of time spent receiving therapeutic treatment, like physical therapy, as a reliable indicator of partial disability. As with total disability, the length of partial disability has a lot to do with the overall settlement value of the case.
  5. Permanent Impairment/Loss of Function. Permanent impairment is the factor that almost always has the greatest bearing on the value of a case; however, the vast majority of cases don’t have a permanency component because most people completely recover from their injuries. In cases involving a loss of function, the extent of that loss is measured by a doctor’s examination with the use of the American Medical Association’s Guides to the Evaluation of Permanent Impairment – a universally accepted medical treatise that governs the measurement of function and permanent loss of function of each region of the human body. According to the Guides, impairment should not be considered permanent until the clinical findings determined over a period of time, usually 12 months, indicate that the medical condition is static and well stabilized. When there is a demonstrably permanent loss of function in one area of the body, it is measured in terms of percentage. For example, the loss of function resulting from an injury to a hand might be expressed as a 10% loss of hand function which, in turn, would result in a 9% loss of the upper extremity and a 5% impairment of the whole person. As mentioned above, permanent impairment is relatively rare. If it is significant, however, insurers will often insist upon having their own specialist perform an evaluation of their own. They like to call them Independent Medical Exams (IME) but the use of the word “Independent” is a gross misnomer. The insurer selects and pays the specialist from a list of physicians that generally only do insurance examinations.

How the above factors are weighted varies from case to case, which is why it is important to have an attorney with years of experience understanding the impact of each factor on the overall value of the case.

About the Author: James M. Lynch is a Massachusetts personal injury lawyer for Lynch & Owens, located in Hingham, Massachusetts.

Schedule a consultation with James M. Lynch today at (781) 253-2049 or send him an email

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