Adjusters’ Formulas

Insurance adjusters in general use the same formula as we do in determining the value of automobile accident cases, but there are some shortcomings to their methods.

Property Damage

Probably the single-most important factor to insurance adjusters when determining the value of an automobile accident claim is property damage.  Insurance adjusters are trained to be skeptical of the “bumper tap” or the low-impact/low damage collision.

Certainly, it is easier to argue on behalf of a case with extremely high vehicle damage.  The reality, however, is that people are injured in low-impact collisions every day.  These injuries make sense for a number of reasons:

  1. Cars are designed to withstand impacts:  the way cars are engineered, they are meant to absorb impacts (especially in places like the bumpers) and to show little damage.  This is because of the materials used and the science that goes into collision testing.  A human being, however, does not have the same “engineering.”
  2. What happens to the outside of a vehicle is not proof-positive of what happens inside:  When a car is hit, the occupants will be moved to some degree.  Any basic physics textbook, for example, will tell you that a rear-end collision causes the occupants to first bend backward, then forward within the car.  Many things can prevent or cause injuries—the positioning of the seatbelt and headrest, how close the seat is to the dashboard, and the positioning of the injured victim.  For example, someone hit in a rear-end impact could have more injuries if he was fully stopped and his body was turned while talking to someone in the back seat.  Because the spine was out of alignment at the time of impact, injuries are more likely. (Click here for a video about what happens to the body during an impact

What this means is that settlement offers in low-impact cases are likely to reflect the unsupported belief of insurance adjusters that injuries cannot be significant where there is little or no damage to the vehicles.  Many of these automobile accident cases must be filed in court.


Many insurance companies (including Allstate, Ohio Casualty, The Hartford, USAA and about 30 others), use a computer program called Colossus to standardize settlement offers.  This proprietary software is designed to treat all accident victims in the same way.  The program depends on keywords in medical records and other documents to increase or decrease the auto accident settlement value.  This is of course dependent on whether those words are used by medical providers, many of whom simply treat the injuries and do not know the effects of their records.

Also tracked by Colossus is whether the claimant’s lawyer has a track record of taking cases to trial, or simply accepting settlements.  This is perhaps the most important piece of information for automobile accident victims.  They will get higher settlement offers if they hire lawyers who frequently go to trial.  Lawyers who simply settle all of their cases have no leverage, because the insurance companies know that they will simply settle.

One of the problems with Colossus is that it does not factor in one of the most important parts of the case: the noneconomic damages.  The victim’s personal story is instrumental—the length of incapacity, how the injuries affected his personal and family life, and, the degree of inconvenience caused.  The basic information considered by Colossus, like the type and extent of injury, is only part of the case.  Lawyers should be prepared to persuade the adjuster, judge and jury, because Colossus does not consider these important details.

Noneconomic Damages

Noneconomic damages are the losses and harms that are not susceptible to easy calculation, like pain, suffering, mental anguish, disfigurement and incapacity.  Insurance adjusters routinely discount these damages.

Part of the reason is that adjusters oftentimes do not have the information they need to make a decision about noneconomic damages.  These are damages that are unique to the case—the effects of identical accidents and injuries will be different on different people.  Part of the lawyer’s job is to place a human face on each case, whether by including this information in the initial demand letter, or informing the adjuster during telephonic insurance discussions.

Additionally, insurance adjusters are instructed to save money where they can, and because noneconomic damages are subjective, it is a simple matter to offer a low amount.  Where an adjuster is being unreasonable, the best solution is to file a lawsuit.