How Are Auto Accident Settlements Determined By Insurance Companies?

Posted on : October 31, 2016, By:  Mike Saltaformaggio

Anyone who has ever been involved in an auto accident and filed a claim with an insurance company may wonder how a settlement figure for a specific amount of money is determined. While it’s true that every case is different and has its own unique set of factors that influence settlement amounts, there are certain guidelines that apply to most major types of auto accident claims.

Basically, there are three auto accident categories most often payable from insurance coverage carried on a listed vehicle: physical damage to the owned auto; injury to people involved in the accident; and damage to non-owned property that was caused by the accident. Of course, it isn’t quite that simple. There are also limits on the relevant auto insurance policies to be considered, the extent of injuries to the accident victims, and the degree of damage done to other autos and property.

Insured Vehicle Damage

Generally speaking, the settlement offered by an insurance company where there is only limited damage to the insured car is for the cost of any repairs as estimated by a repair expert. This would include repair work labor plus new or used parts as the policy qualifies.

When the cost of repairs and replacement parts exceeds an established and agreed value for that vehicle, it is considered to be a total loss. Settlement for the portion of the auto accident claim would then be based on the agreed value of that auto less any applicable deductibles that apply to the purchased coverage.

Other Property Damage

When other non-owned property is damaged in the auto accident, such as other vehicles or fixed property such as light poles, fences, etc., that damage is paid under the Property Damage Liability Coverage of the insurance policy that covers the vehicle determined to be at fault. Auto accident claims for other vehicles is handled similarly to the above noted damage claim to the Insured Vehicle, with a few exceptions.

Damage to other types of property is either repaired or replaced based on an agreed valuation of the object that was damaged.


Settlement values for auto accident injury claims are determined separately from the vehicle damage. It is calculated by adding together the cost of documented medical bills, lost wages resulting from missed work, and the cost of any future anticipated medical treatment, rehab, and/or durable medical goods that might be needed during recovery from the physical injury that was incurred. Those injuries may be severe enough to trigger another settlement aspect of an auto accident injury claim known as “pain and suffering.”

Compensation for pain and suffering is awarded based on many intangible aspects of any auto accident claims. An attempt is made to place a value on the “pain and suffering” incurred by an injured person as a result of injuries suffered in the accident, which would include general discomfort, any inconveniences incurred such as being unable to garden or enjoy a planned trip, and any future discomfort such as extensive rehab or even a lifelong handicap. Minor injuries that were quickly treated would be unlikely to generate the kind of settlement dollars that major auto accident trauma would require.

Insurance Policy Limitations

Any settlement will be affected by the coverages that were purchased and apply to the auto policy of the at-fault person. Each state usually has minimum limits to carry for Property Damage and Injury Liability Coverages. Minimum limits seldom are adequate if the auto accident was a serious one and/or more than one car was involved.

As an example, minimum Property Damage Liability limits of $10,000 would not cover repairs to a vehicle that exceeded that amount. Nor would that same $10,000 pay for two cars damaged that together exceed $10,000. Serious accidents that resulted in major trauma and extensive medical bills to more than one person can easily be exhausted and unable to pay the bills, let alone any “pain and suffering.” Options as this point include filing auto accident claims under individual auto policy coverages such as Underinsured Motorist or suing the at-fault party personally to pay for the settlement differences.

Find Help To Handle Auto Accident Claims

Handling such details is beyond the capability of uninjured people, let alone those who have already suffered as the result of an auto accident. It requires the dedication and experience of auto claims lawyers who have the knowledge and experience to effectively handle such a case. How valuable it is to know that auto accident claims will be negotiated with the utmost skill or successfully argued in court based on that acquired expertise in auto claims.

Need To Find Auto Accident Claims Lawyers?

The Experienced Attorneys With Maggio and Thompson Can Help!

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