How Do Insurance Companies Calculate Auto Accident Settlements?
After an auto accident has occurred and the insurance claims have been filed, it’s not uncommon for a person to receive their settlement letter and wonder why the amount of the settlement is so low. Insurance companies are rarely transparent when it comes to how they pay out settlements.
While there is no exact formula that is used to calculate an auto accident settlement, many insurance companies use computer software. This software is a simple calculation tool only available to insurance companies that simply takes various situational variables in determining how much gets paid out.
In terms of damaged vehicles, the settlement is often for the cost of repairs or the cost of replacement for the car. The biggest factor when going by car damage is the value of the car and whether or not the cost to repair exceeds the car’s value. This is often the case and usually results in a settlement that is not enough to buy a new car.
Insurance companies have tiers of coverage that dictate the maximum payout for a variety of situations. A policy limit is a limit that is selected when the type of coverage is selected. Regardless of the situation, the insurance does not pay out more than this cap on their own. For example, if a car accident resulted in damages of $40,000 and the policy limit was $25,000, the driver would be liable for the $15,000 difference. At this point, the other option is to hire an attorney and sue the other driver for the difference in cost if a case can be established.
Auto accidents can be an extremely trying time, especially in situations that have resulted in injury. These situations are made much more stressful by small, insufficient insurance payouts. If you or a loved one has been in an auto accident and received less in the settlement than what is needed, contact the law offices of Richard A. Stoloff today to discuss your options. You may be eligible for an additional payout.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.