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Personal Injury: "Reserves" & Potential Damage to a Case From Day One

There are many traps lurking in the insurance industry's claims handling process. Such traps are there to defeat "do-it-yourself" personal injury claimants. To the question: Why do I need an attorney? I answer, because what you may not know will in fact damage your claim from day one. Almost as soon as a new claim is reported to an insurance company, in the process of "setting up the new claim file", the insurance company has to do something called "setting a reserve." A "reserve" is an estimate of the potential value of your claim, the amount the company might have to pay on the claim. This is a required accounting procedure, so that the financial people at the insurance company at any given time can determine what their total potential financial liabilities are. From an accounting viewpoint, the "reserve" may sound harmless. But, from an injured person's perspective, this is dangerous territory. The problem is that the insurance company must set up a reserve right away, as soon as possible after the initial report of a new claim. A claims adjuster or supervisor will want to interview you right away. If you are a typical nice person who wants of course to cooperate fully, you may take the phone call and defeat your own claim before it starts. Here's why: The adjuster or supervisor will be very friendly and try to set you at ease. "I'm sorry to hear you're injured, let's make this as easy as possible for you." After you are disarmed, they'll ask questions along the lines of: (1) "well you weren't hurt seriously were you?" Or, (2) "well no bones were broken were they?" Or, (3) "well it was a simple fracture, not a compound fracture, wasn't it?" Or, (4) "you haven't seen a real doctor have you, all you're doing is seeing a chiropractor, right?" Or (5) "you're feeling better today, aren't you?" (6) "were you able to make your own breakfast today, drive home from the hospital, do the laundry and take a shower without assistance?" You get the idea. There is an entire formbook of such reserve setting loaded questions. This is why I always insist on taking this phone call myself. I don't know what "serious" means, I've known people with injuries disparagingly called "soft tissue only" who were in fact in excruciating pain for months or years after an accident. I've also observed injured folks who in the initial days after an accident had not yet felt the full impact of torn ligaments, damaged joints, and even worse. In the rush of busy hospital emergency rooms I have seen fractured ribs and other bone fractures missed initially, more times than I ever would have believed before I picked up my first personal injury case over 20 years ago. The point is that you must be honest and cooperative with the insurance company at all times. But, where a hardball is being thrown at you, never use a wiffle ball bat. You may unknowingly undervalue your claim, making it very difficult later to recover a fair settlement for your injuries. Adjusters negotiate your claim either with the authority placed on the file by supervisors, or with desk authority. This means that once the reserve is set, a dollar amount may be placed on the file that the adjuster is bound not to tell you. The adjuster may only negotiate up to that dollar amount on that file, and will not want to ask a supervisor for more. Desk authority means that a given adjuster may only have a certain level of authority on all of the claims on their desk. For example, a new, inexperienced adjuster may only have authority to make offers up to $10,000. A more experienced adjuster who has proven their ability to keep claims settlements low may have a desk limit of $50,000. Finally only the supervisor, with a manager looking over his shoulder, may have authority up to $100,000. Many times I have heard adjusters tell me "this is all I have on a claim". However, my interest is not in what the individual claims adjuster is dealing with in the internal insurance company mechanisms. I want the highest optimal settlement I can possibly achieve for my client, regardless of the insurance company's inside working. Experienced personal injury attorneys can help position your case to maximize the result by flying over the traps that the insurance claims process set for folks from day one of the claim. Reserves are only one of the traps. Do not fly this trip solo.

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This guide is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.

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