Factors Considered by
Insurance Companies in Settling

    Insurance companies take into account numerous factors in deciding whether and for how much to settle personal injury cases.

    Most cases require proof of fault. Fault can be based on intentional conduct, reckless conduct, or negligence. Occasionally, liability is found without fault, such as in some dog bite or product liability cases, but even those cases require proof of certain elements that must be satisfied before payment will be made.

    The majority of personal injury cases are brought as a result of negligence. Wisconsin is a comparative fault state. That means that the injured person can only recover if his or her negligence is not greater than the negligence of the person against whom the claim is made. To the extent that the injured person has some degree of causal negligence, the damages are reduced by the percentage of negligence attributable to the victim. For example, if the victim's damages are $10,000, but he or she is 40% causally negligent, the recovery is only $6,000.

    Where more than one person has negligently caused the injury, there is often a dispute over the comparative fault of two or more tortfeasors and the victim. Any person who has less than 51% of the total comparative negligence is only responsible for those damages attributable to that person's negligence. Any person who has 51% or more of the negligence is jointly and severally liable for all of the victim's damages, with the exception of those damages attributable to the victim's negligence. Contribution among tortfeasors may be sought by parties who pay more than their share of the damages.

Several factors are quite important in evaluating the injury.

    Property damage to an auto is often indicative of the amount of force in the collision. There is usually a high correlation between the amount of property damage and the extent of injury to passengers. Insurance companies seldom voluntarily pay substantial damages for an injury in the absence of significant property damage.

    The extent of personal injury damages for pain and suffering depends on a host of variables. Insurers consider past medical history, pre-existing related illnesses or injuries, prior claims history, when the treatment following the trauma began, who referred the patient to the health care providers, what the original history and chief complaints given by the patient were, subjective and objective physical findings on examination, laboratory and radiological findings, the original diagnoses, the original treatment plan, follow-up treatment, the identity and credentials of the treating health care providers, the continuity or lack thereof in patient complaints and treatment, the length of the healing period, extent of impairment and disability prior to and upon reaching the healing plateau, findings and opinions on the nature and extent of permanent injury, residual functional capacity physical exertion limitations, and prognosis. It is important for the victim to document the injury to the extent possible by following the advice of health care providers in every aspect on the road to recovery.

    Special damages such as medical expenses must be itemized before the claim can be fully evaluated. [This requires detailed record keeping and correspondence to the medical providers and usually several different health or medical payment auto insurers.] The liability carrier will look not only at the gross amounts of special damages incurred, but also from whom the treatment was rendered, and for what service. Either the diagnostic bills or the treatment bills may be deemed excessive and questioned by a conservative adjuster. There must be a reasonable relationship between them in order to obtain fair compensation.

    Wage loss and permanent loss of earning capacity is often at issue. These items must be substantiated by fact witnesses through the employer and in some cases, expert opinions. If the victim cannot return to work, evaluation for retraining may be necessary through the local office of the Division of Vocational Rehabilitation. Thorough and expensive evaluations from vocational experts, including rehabilitation psychologists and economists are necessary in some cases.

    The venue of the case is important for settlement discussions. Some counties are notorious for low verdicts or high verdicts. The choice of venue can be a strategic advantage or disadvantage.

The identity of counsel is often a factor in settlement negotiations. Those attorneys who have a track record of successful verdicts in similar cases are more likely to have leverage with an adjuster than attorneys who do not. The verdict potential of the case is always the benchmark for what a fair settlement should be.

    The attorney for the injured person must attempt to make a reasonable projection of what a jury would award in the event of trial, and then set his sights on a settlement figure near the top of the probable verdict range. Unless all the relevant factors are properly analyzed, the effort cannot hope to be successful. Negotiation by an experienced personal injury attorney who tries cases is often essential to obtain a fair settlement.