How Insurance Companies Calculate a Settlement Offer (And Why It’s Usually Too Low)
You get into an accident. You’re injured, you’ve missed work, the medical bills are piling up—and then the insurance company comes back with a settlement offer that feels… off.
Too fast. Too low. Too easy.
You’re not imagining it. Insurance companies often calculate their settlement offers to protect their bottom line—not your recovery. I’ve seen it hundreds of times, and I want to break down how this works—so you can make smart decisions and avoid being short-changed.
How Insurance Companies Evaluate a Claim
When an injury claim is filed, insurance adjusters look at:
Medical expenses
Lost income
Property damage
Pain and suffering (if liability is clear)
Policy limits
But behind the scenes, they’re not just checking numbers—they’re using internal formulas and software to come up with a number they think you’ll accept. And often, it’s nowhere near what you truly deserve.
The "Multiplier" Method: A Common Tactic
Many insurance companies use what’s called a multiplier method to estimate your non-economic damages (like pain and suffering). Here’s how it works:
They total your medical bills (let’s say $10,000)
They assign a multiplier based on the severity of your injury (usually 1.5 to 5)
So $10,000 x 2 = $20,000 total offer (including medical bills, not on top of them)
The problem?
They often lowball the multiplier—or argue your injuries weren’t “serious enough” to justify anything more than a 1.5. It’s a way to make a quick, low offer that sounds reasonable—but doesn’t reflect what you’ve really been through.
Software Like Colossus: Why You Feel Like a Number
Many large insurance companies use claims software (like Colossus) to evaluate injury claims. This software:
Assigns value to injuries based on medical codes
Flags “delays in treatment” or “gaps in care” as reasons to lower value
Prioritizes objective data over human context
Translation? If you didn’t go to the ER, or there’s a two-week gap in your chiropractic care, the computer might decide your pain isn’t “worth” much. That’s why your story needs more than software—it needs advocacy.
Why Initial Offers Are Almost Always Too Low
Here’s what insurance companies are banking on:
You’re in pain and want to settle fast
You don’t know what your case is truly worth
You’re not represented by a lawyer
You’re unaware of long-term complications your injuries might cause
They might even tell you, “This is the best we can do,” when in reality, it’s just the starting point. Once I step in, those same cases often increase significantly—because we provide evidence, expert opinions, and pressure they don’t expect.
How I Evaluate the Real Value of Your Case
As your attorney, I don’t rely on software or shortcuts. I look at:
The full picture of your injuries—not just bills
Your ongoing care and future medical needs
The impact on your ability to work, move, sleep, or live normally
Emotional distress and real-life disruption
Supporting statements from doctors, employers, and family
Your case isn’t just a spreadsheet—it’s your life. And I make sure it’s treated that way.
Final Thoughts
If you’ve received a quick settlement offer from an insurance company, slow down. What seems like a fair check might be a fraction of what you actually deserve.
Call Chatenka Injury Law today for a free consultation.
I’ll personally review your offer, break down what’s missing, and help you fight for a settlement that truly reflects your losses—short-term and long-term.
