How Insurance Companies Evaluate Claims

The evaluation process of your personal injury claim is one of the most crucial moments following a car accident. It is at this point that the insurance company will determine how much your injuries are worth.

Of course, every personal injury claim is different, and each insurance company handles their claims differently. There are, however, some general procedures that most insurance companies will follow regarding a personal injury claim.

Unfortunately, these “standard procedures” are not always created to best serve the client. Far too often, insurance companies refuse to pay out or will undervalue personal injury claims for any number of reasons.

At Cardone Law Firm, our expert New Orleans car accident and personal injury attorneys believe that it is always in the best interest of our clients to understand what they are up against, and how the legal processes can affect the outcome of their case. Below you will find information regarding how insurance companies evaluate claims so that you may learn to better deal with them should you, unfortunately, have to file a personal injury claim because of a car accident or other reason.


The individuals who are responsible for investigating your personal injury claim for the insurance company are known under a variety of names including:

  • Claims adjusters
  • Claims handlers
  • Third party administrators
  • Claims specialists
  • Claims representative
  • Independent claims analysts

Whatever title the insurer chooses for this employee, it’s important to recognize that they (A) all do the same work and (B) all work for the insurance company. The reality is that they are trained to undervalue claims or outright deny them. While their actions may not be ill-intended to your personal situation, claims adjusters will act in the manner that best benefits THE INSURANCE COMPANY.


Insurance companies and their adjusters use what are commonly referred to as claims manuals for guidance to handling a personal injury claim. These claims manuals may also be referred to as:

  • Guidelines
  • Standard Operating Procedures
  • Handbook
  • Claims’ Professionals’ Guide
  • Claims Guidelines
  • Best Practices

In these claims manuals, you can expect to see some general areas of information such as:

  • How to handle an insurance claim from beginning to end
  • Guidelines for documentation and policies for document imaging and retention
  • Service standards, time limits for responding to calls, emails and/or letters
  • Financial controls such as standards to abide by when negotiating settlements


The expert and caring New Orleans attorneys of Cardone Law Firm understand how to use these claims manuals to the benefit of our clients. Failing to have a claims manual and/or not following the proper process as set forth in the guidelines can spell trouble for an insurance company.

This is especially true in first-party personal injury claims when a client is asserting that the insurer acted in bad faith by not fairly, timely, or adequately evaluating their claim.

As claims manuals vary from insurer to insurer, an adept attorney can use either a very specific insurer handbook, or an overly general manual, to help strengthen your case. For example, detailed claims manuals can be used as a mirror to compare company procedures against the handling of the client’s claim. If it can be proven that the adjuster deviated from official procedures, this can be used as evidence to show bad faith.

On the other hand, guidelines that are too general can be shown to leave too much discretion to the insurance claims adjuster. This will allow an experienced attorney to argue that adequate care was not met. Also, documents titled in a manner that raises the bar, such as “Best Practices”, can be shown to warrant a higher level of obligation from the insurer and adjusters.


In addition to insurance company guidelines, there is a damage formula used to determine how much a claim is worth. It is worth noting that the worth of the claim does not always determine the total compensation that is offered to the insuree.

To begin with, total medical care and related expenses – known as “special damages” – are used as a base figure. Additional damages – known as “general damages” are also taken into consideration and can include:

  • Missed work time and other lost income
  • Permanent physical damages, disabilities, and disfigurements
  • Emotional damages
  • Pain and suffering damages

Depending on the severity of your injuries, the formula will generally multiply the costs of your medical expenses by 1 or higher (up to 5). Minor injuries generally remain on the lower end, with medical costs usually multiplied by 1.5 to 2.

Medical expenses caused by serious,  invasive, long-lasting injuries can be multiplied by 5, or even higher in truly life-altering situations.

Lost work income may be added to this result or included with the initial base number.

Please keep in mind that this formula and the number reached by an adjuster does not guarantee that specific amount. It is used by the insurance company as a guidepost by which to begin their negotiations.


Insurance companies have begun to use computer programs known as claims evaluation software. There are a number of these programs being used, with the most prominent one known Colossus.

These programs are used by adjusters to evaluate personal injury claims, medical bills, treatments, medical billing for your injuries, and can even draw from a massive database of related legal cases to predict verdicts.

Sadly, what has begun to occur is that insurance companies have used these programs to undervalue and negatively affect claims.

These programs use specific formulas which are fed information by the insurance company, essentially allowing the insurer to dictate the injury values that are placed into the formulas. This allows insurers to reach the lowest possible settlement amounts.

Of even more concern is that the information inputted into these programs are generally the private property of the insurance company and may not be susceptible to court inspection.

How To Protect Yourself From These Automated Nightmares

The Consumer Federation of America released a “Consumer Alert” in late 2010, detailing the issues of programs like Colossus and offered 4 tips to help personal injury victims protect themselves from the bad faith practices of insurance companies.

These tips include:

  1. Find out if a computer program was used to evaluate your claim. These programs are used to calculate a significant part of the settlement offer and do not encourage fair and appropriate investigation of the claim.
  2. Demand to see the range of results the computer generated. If the insurer refuses to show you the range of results, file a complaint with the state insurance department.
  3. Do not accept any offer less than the “high”-end of the range and consider making a counteroffer that is above the high offer. Even the “high” end offer can be set below what is fair.
  4. If the insurer does not agree to settle on the high end range, consider filing a complaint with the state insurance commissioner and seeking legal help!

Get a dedicated team that you can trust and depend on when your personal injury claim becomes too much to handle. Cardone Law Firm knows how to fight for you and protect your rights.  

For your confidential consultation, contact us online or Phone Cardone at 504-522-3333.

Contact Information