The claim lifecycle, in seven steps
Every claim, from a fender-bender to a nuclear-verdict candidate, moves through the same seven stages. Where a file sits in this lifecycle usually explains what still needs to happen to it.
- First notice of loss and intake. The claim is reported, basic facts are gathered, coverage is provisionally identified, and any immediate steps, such as mitigation or medical triage, are taken.
- Coverage review. The policy and its endorsements are checked against the insured, the dates, the limits and any exclusions, with a reservation of rights issued if needed.
- Investigation. Statements, documents, photos and the scene are reviewed; liability, causation and damages are assessed; experts are brought in where needed.
- Evaluation and reserves. Exposure is assessed, the reserve is set or adjusted, and a strategy is chosen: negotiate, litigate or pursue subrogation.
- Litigation management, if a suit is filed. Defense counsel is retained, pleadings are exchanged, discovery runs, and any motions or ADR are scheduled.
- Resolution. The claim resolves by settlement, mediation, arbitration, or trial and judgment; a release is signed, payment issues, and any liens are addressed.
- Recovery and closure. Subrogation is pursued where it applies, salvage is handled, and the file is documented and closed.
Special damages vs. general damages
Special damages are economic losses with a price tag, such as medical bills and lost wages. General damages are non-economic losses, such as pain and suffering, that a jury has to put a number on.
| Special damages (specials) | General damages (generals) | |
|---|---|---|
| What they cover | Economic losses | Non-economic losses |
| Examples | Medical bills, future medical costs, lost wages, lost earning capacity, property damage | Pain and suffering, emotional distress, loss of enjoyment of life, loss of consortium |
| How they are measured | Bills, receipts, pay records and expert projections | Judgment of the adjuster, the parties or the jury |
| Where disputes arise | Billed versus paid amounts, necessity and causation of treatment | Severity, credibility and anchoring by counsel |
Terms that change what a file is worth
A handful of concepts move bodily injury values more than any others. Knowing where each one shows up in the file is most of the evaluation.
- Maximum medical improvement tells you when the medical picture is stable enough to value.
- Pre-existing conditions and aggravation decide how much of the harm the incident caused.
- Letters of protection and billed versus paid amounts shape the specials a jury sees.
- Life care plans drive the future-damages side of catastrophic claims.
- Time-limited demands put a deadline, and potential excess exposure, on the whole evaluation.
To see how these combine into risk on a live file, try the nuclear verdict risk checklist.
Major lines of business, at a glance
Bodily injury exposure shows up differently depending on the line of business behind the claim. These five account for most of what a claims team sees.
| Line | What it covers |
|---|---|
| Workers' compensation | Employee injuries and illnesses arising out of employment: medical care, wage replacement and disability, generally in exchange for limiting the employee's right to sue. |
| General liability | A business causing bodily injury or property damage to someone else through its premises, products or operations. |
| Personal auto | Liability, MedPay or PIP, uninsured/underinsured motorist, and collision and comprehensive for individuals and families. |
| Construction defect | Faulty design or construction causing property damage or loss of use, often multi-party and long-tail. |
| Commercial auto | Business vehicle use, owned, leased, hired or non-owned, typically with higher severity than personal auto. |
Updated by the amaise team.