How Insurance Companies Evaluate Personal Injury Claims

You were hurt, and now an adjuster from the other person’s insurance company is calling, asking for your records or offering a check. Here is how that adjuster values your claim. An adjuster investigates a claim and recommends how to settle it, and the file they build answers three questions. Was the insurer’s customer at fault, and how much of the blame is yours? Is there coverage, and how much? What do your medical and pay records show the injury cost you? Bills and lost pay get added up. Pain and suffering gets estimated, sometimes with software that scores the injury from your records. No law sets a formula, so what’s in the file drives the number.

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Michigan’s rules are in the highlighted boxes, current as of September 2026.

Who does the adjuster work for?

A claim under your own policy is a first-party claim. A claim against someone else, paid by their liability insurance, is a third-party claim (NAIC Model Regulation 902, section 3). The difference matters:

• The other person’s insurer has a contract with its own customer, not with you (Texas Department of Insurance). You don’t have to give it a recorded statement, and it’s safer not to before you’ve had advice.
• Your own insurer is owed cooperation. Notify it right away, give it the reasonable information it asks for as proof of your claim, and cooperate as your policy requires (Michigan Department of Insurance and Financial Services, or DIFS).

The process is much the same for a driver’s, a store’s or a homeowner’s insurer. See what drives the value of a slip and fall claim and how to get compensated after a dog attack.

What goes into the adjuster’s file?

Much of the file comes from you. One insurer’s form letter to injured people, attached to a 2010 agreement with state regulators, asked them to sign medical and wage authorizations and to send their medical bills.

Fault: who caused it, and how much was you?

The adjuster reads the police report, photos, witness statements and your own account, then gives each side a percentage of fault. Most states reduce what you recover by your share, and many bar recovery once it reaches 50% or 51%. Alabama, Maryland, North Carolina, Virginia and Washington, D.C., can bar it for even slight fault (Cornell Law School’s Legal Information Institute). See how each state handles shared fault.

Coverage and policy limits

The adjuster checks whether the policy covers this person and this event. The policy limit is the most the insurer will pay under that policy, however large your losses. Florida, for example, requires an insurer to disclose its limits within 30 days when a claimant asks in writing (Fla. Stat. § 627.4137); check your own state’s rules. In a Michigan lawsuit, the defendant generally must disclose its coverage early in the case (MCR 2.302(A)(1)(g)). If the limits are too low, underinsured motorist (UIM) coverage on your own policy may pay (Texas Department of Insurance).

What if the insurer “reserves its rights”?

An insurer handling a claim under a reservation of rights investigates the claim, or defends its customer in a lawsuit, but keeps the right to deny coverage later, for example under a policy exclusion. In Michigan, an insurer that defends its customer must give that customer reasonable notice of the reservation, or it can be barred from denying coverage. It has no duty to tell you (Kirschner v Process Design Associates, 1999). In that case, a worker won a jury verdict against the company that designed the equipment that hurt him. The Michigan Supreme Court still let the company’s insurer enforce a policy exclusion against his claim for payment. If coverage is in doubt, look for other insurance that might pay, including your own.

Medical records, treatment gaps and old injuries

Your medical records are the heart of the file. In the regulators’ description of one insurer’s claims program, the adjuster entered detailed medical information about the injury, its treatment, the results and the prognosis, and the program flagged inconsistencies. Diagnoses are recorded as standard ICD-10 codes (Centers for Medicare & Medicaid Services), so make sure every injury gets written down. You can get copies of your records: providers generally must act on your request within 30 days (45 CFR 164.524).

Gaps in care, or missed therapy, let the insurer argue that you weren’t badly hurt or that something else caused the problem. Michigan’s model jury instructions (M Civ JI) also say you have a duty to use ordinary care to limit your losses, which can include seeking and following medical treatment (M Civ JI 53.05 and its comment).

An old injury doesn’t erase your claim. Michigan’s instructions, for example, let you recover for making a condition worse, and the person at fault is responsible even if you were unusually vulnerable (M Civ JI 50.04, 50.10). Jurors must separate the old harm from the new “if it is possible to do so”; if they can’t, the whole amount is assessed against the defendant (M Civ JI 50.11). Tell your doctors about earlier injuries, so your records show the before and the after. For a back that was already worn before a crash, see herniated disc claims.

Lost pay

Expect to prove what you earned and what you missed: pay stubs, tax returns and a letter from your employer showing your pay rate and missed days. Lost earning potential counts too if the injury limits the work you can do later (M Civ JI 50.21).

How do adjusters put a number on pain and suffering?

Economic damages, such as medical bills and lost pay, get added up. Noneconomic damages, such as pain, suffering, physical impairment and disfigurement, have no price list (M Civ JI 50.21). Michigan’s jury instructions say the amount for some losses “cannot be proved in a precise dollar amount” and leave it to jurors’ “sound judgment” (M Civ JI 50.01).

Online calculators multiply medical bills by a number, or put a dollar value on each day of pain (a “per diem”). These are informal rules of thumb with no official basis. Don’t let a figure produced that way anchor what you think your claim is worth. See how pain and suffering damages are valued and proven.

What claims software does

One detailed public description comes from state insurance regulators. In 2010, regulators led by Florida, Illinois, Iowa and New York reached an agreement with Allstate after what they called the first multistate examination of a national insurer’s use of claims software. They found that the program Allstate licensed, Colossus:

• used about 10,000 rules to turn the medical information an adjuster entered into “trauma severity points,” and the points into a dollar range for general damages, such as pain and suffering
• was “tuned” from recent settlements region by region, generally with separate regions inside a state where similar claims settled more than 10% apart
• didn’t evaluate medical bills, lost wages or fault; the adjuster entered those, and the program added the costs and subtracted the percentage of fault

An experienced claims employee then set a value range, and adjusters negotiated within it unless new information or other circumstances called for a different value. The regulators didn’t find institutional underpayment of claims, but they required more management oversight and a notice telling claimants the program might be used. In 2014, DIFS recommended that Allstate Property and Casualty Insurance Company give claimants a copy of the evaluation on request; the company declined, calling it work product.

Other insurers’ tools may differ. Either way, a program like this can weigh only what’s entered from your records, and new information can move the number. For how location and the other value factors fit together, see how to evaluate a personal injury case.

What is a claim reserve?

Once a claim is reported, the insurer records on its books the amount it expects to pay, called a loss reserve (NAIC glossary). One way to set it is for a claims person to estimate the claim’s value as the facts come in (NAIC Statutory Issue Paper No. 55). A reserve is an internal estimate, not an offer, and it can change as new records arrive.

Has an adjuster asked for a recorded statement, a signed authorization or an answer to an offer? Get a free case review first. Four quick questions, no cost, no obligation.

What tactics should you expect, and how should you respond?

A request for a recorded statement

The other side’s adjuster may call within days and ask to record your account. You don’t have to agree. If you do talk, stick to facts you know, and don’t guess or apologize: a casual “I never saw them” can end up in your share of fault.

A broad medical authorization

Under the federal health privacy rule, a valid authorization must describe the records it covers in a specific and meaningful way and must have an expiration date or event. You can revoke it in writing, though that doesn’t undo disclosures already made (45 CFR 164.508). A form reaching every record you’ve ever had covers far more than your injury. You can get your records yourself and send the ones that relate to it.

A quick offer and a release

An early offer can come before you know how badly you’re hurt. Taking it means signing a release, which gives up your right to sue in exchange for the payment (Cornell Law School’s Legal Information Institute). A release usually ends the claim for good, even if the injury turns out to be worse. Under the NAIC’s model regulation, which states can adopt, an insurer shouldn’t suggest a third-party claimant’s rights may suffer if they don’t sign a form or release by a set date. The exception is a notice about the legal deadline to sue (Model Regulation 902, section 7(E)).

An exam by the insurer’s doctor

Your own policy may require an exam by a doctor the insurer chooses, often called an independent medical exam (IME). The other side’s insurer has no such contract with you, but once you sue, a court can order an exam of a condition in controversy, on a motion showing good cause (Federal Rule of Civil Procedure 35; Michigan Court Rule 2.311). In 2014, DIFS recommended that one insurer stress to its adjusters and exam doctors that results should in no way be decided in advance.

Surveillance and social media

In one Michigan case, an insurer’s surveillance video showed a woman bending, lifting, carrying, driving and running errands on days she had claimed she needed help with those tasks, and the court held that a fraud clause in her policy barred her PIP claim (Bahri v IDS Property Casualty Insurance Co, 2014). Courts have since held that, for PIP benefits, such a clause can reach only fraud in buying the policy (Meemic Insurance Co v Fortson, 2020; Williams v Farm Bureau Mutual Insurance Co of Michigan, 2021). But an insurer can still deny benefits it believes are fraudulent, and a court can make you pay the insurer’s attorney fees if your claim was in some respect fraudulent or so excessive that it had no reasonable foundation (MCL 500.3148(2)). Keep what you report about your limits accurate, and keep the injury off social media: in a lawsuit, each side can seek information that is relevant, not privileged and proportional to the needs of the case (Federal Rule of Civil Procedure 26(b)(1); MCR 2.302(B)(1)). Ask a lawyer before deleting anything.

How do first offers and negotiation work?

Many claims settle through offers and counteroffers. Four things help:

1. Answer with documents, not just a bigger number. In the process regulators described, adjusters negotiated within a value range unless new information or other circumstances justified a change. Updated records, a doctor’s note on future care and proof of missed work are new information.
2. Get it in writing. Ask what the adjuster still needs and how any offer was figured. If the insurer won’t pay, ask for its reasons in detail and in writing (Texas Department of Insurance).
3. Know what you’d keep. Compare the offer with your bills, lost pay and future care, then subtract any lawyer’s fee, case costs and liens. See how personal injury lawyers get paid and what goes into a car accident settlement.
4. Watch the calendar. The deadline to sue usually runs from the injury, and settlement talks don’t, by themselves, pause it. In Michigan, most injury lawsuits must be filed within three years (MCL 600.5805(2), 600.5827), and the general tolling law doesn’t list negotiations (MCL 600.5856).

What rules limit how insurers handle claims?

The National Association of Insurance Commissioners (NAIC), governed by the chief insurance regulators of the 50 states, Washington, D.C., and five U.S. territories, writes model laws that states can adopt in their own form. Its Unfair Claims Settlement Practices Act, a stand-alone model since 1990, lists unfair practices including:

• knowingly misrepresenting relevant facts or policy terms to claimants
• refusing to pay claims without a reasonable investigation
• not trying in good faith to settle promptly and fairly once liability is reasonably clear
• failing to promptly explain the basis for a denial or a compromise offer

Under the model, a practice counts only if it’s committed flagrantly and in conscious disregard of the act, or often enough to show a general business practice. The state’s insurance commissioner enforces it, and the model doesn’t create a right for claimants to sue over a violation (NAIC Model Act 900, sections 1, 3, 5 and 6). Each state’s own law may differ.

How do you complain about an insurer?

Outside Michigan, contact your state’s insurance department. In Texas, for example, if you complain about another driver’s insurer, the company must write back explaining why it denied your claim or paid what it did (Texas Department of Insurance).

What to do next

1. Get care, and keep it consistent. See a doctor promptly, mention every symptom and any earlier injury, and follow the treatment plan.
2. Build your own file: records and bills, pay stubs, an employer letter on missed work, photos, a short journal of what you can’t do and a log of every call. Our checklist of things to do after a car accident covers the first days.
3. Hold off on signing or recording anything for the other side’s insurer until you’ve had advice.
4. Check every source of coverage and every deadline, including PIP, medical payments or underinsured motorist coverage on your own policy. In Michigan, give your auto insurer written notice within one year of a crash to protect PIP benefits (MCL 500.3145(1)).
5. Get a free case review before you accept an offer. Get a free case review, or in Michigan, compare injury lawyers near you. Not sure you need a lawyer? See when you need a personal injury lawyer, and get any fee agreement in writing.

What waiting can cost

• Your right to sue. Negotiating doesn’t stop the clock. In Michigan, most injury lawsuits must be filed within three years (MCL 600.5805(2)).
• Your own coverage. Uninsured and underinsured motorist claims can have short policy deadlines.
• Your proof. Every week without care is a gap the adjuster can point to, and witnesses and video don’t last.
• The claim itself. A release signed before you know the full extent of your injury usually ends it.

What a good outcome looks like

The adjuster’s file matches your life: complete medical records, proof of every lost paycheck and a split of fault that fits the evidence. Offers come with a written explanation, and you answer them with documents. You decide whether to settle knowing the policy limits, your deadlines and what you’d keep after fees and liens. From wondering how an adjuster decides what your claim is worth to knowing what goes into the file, what tactics to expect and how to respond. For the bigger picture, see our guide to personal injury claims.

Updated September 25, 2026

This guide is general information, not legal advice, and laws change. For advice about your situation, talk to a lawyer licensed in your state. Reading this page or contacting us does not create an attorney-client relationship.