You probably already know that in most cases, there is an insurance company on the other side of the case, that is evaluating your claim or case, and making vital decisions about whether they want to offer to settle your case, or whether they want to take your case all the way to trial.
Insurance companies can and do make offers to settle cases—although their offers are often far below what would adequately and fairly compensate accident victims. But their offers, while unfair and inadequate, are not altogether arbitrary. So how does an insurance company look at, and evaluate your claim, and make a decision about whether to offer you compensation, and if so, how much?
What Will a Jury Do?
Insurance companies make offers based on a reasonable estimation of what a jury will do with your case. Obviously, that’s just a prediction—a jury can award you whatever it wants, and juries can and do unexpected things sometimes.
But when we look at an aggregate sample of jury verdicts, look at enough samples, insurance companies and your own attorneys can estimate what a typical jury will do with a case like yours—that is, a case that has about the same type of accident, with about the same injury, and with a victim that is about your demographic.
If juries gave a million dollars to everybody with a neck sprain, insurance companies would offer a lot more than they do. The reason why insurance companies offer less for that type of injury is because they know that juries tend to award less.
It’s All About Risk
Insurance companies operate on risk analysis. When they look at what juries do with your type of case, they ask what their maximum exposure is—that is, what is their “worst day in court” (which for you, would be your best day in court).
Once they establish that figure, they aren’t going to offer you that amount—they are going to offer you an amount less than that because a settlement is inherently a compromise, and an avoidance of the risk of trial—for you and the insurance company.
Economic and Non-Economic Damages
Insurance companies tend to like “hard numbers” (in legal terms, economic damages). If you have damages that constitute medical bills or lost wages, insurance companies tend to understand that a jury will, assuming there is liability, award you these “out-of-pocket” damages.
Insurance companies aren’t so willing to offer you full value for your non-economic damages—things like pain and suffering, anxiety, fear, and those things that don’t have a definitive number or value attached to them.
That doesn’t mean they won’t consider these damages, it just means that the amount they will offer to settle is more influenced by the economic, as opposed to the non-economic damages.
