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The Bodily Injury Reserve

It will control the negotiation of your claim

The bodily injury reserve is a troubling issue. Claim adjusters must set aside “bodily injury exposures” within seven days from learning about the injury.


An exposure is the “potential” payment they are going to make because of an injury. Remember that an “exposure” applies to any person that can make an injury claim against the policy.

If you are driving with three passengers and you cause a vehicle accident, then there would be three injury exposures against the policy.

So what is a reserve?

It is literally a movement of money from one account to another. The first account (the account money is moved from) is considered an asset because this money is disposable income that the insurance company can use as it pleases.

The second account (the account money is moved to) is considered a liability. This money will eventually be paid to injured people. By placing the money in this account, the insurance company is essentially saying that this money will be paid out to the person making the claim.

This balance becomes a kind of trust. The insurance company is basically borrowing this money from its creditors (the injured person).

The insurance company knows they would have to eventually pay money to this person, so they would treat them as holding this money as a "loan."


Insurance carriers must do this. This is not an option. Trade Regulations require them to do this. Why? Because it protects investors! The reserving practices directly affect the price of that specific insurance company’s stock.

If the insurance company has too much money on reserves, then the stock price would be lower since that amount would be money owed to creditors (injured people).

If the insurance company has a low amount of reserves, then the insurance carrier would have more money on hand displaying higher assets, and consequently making the stock higher.

So, if the insurance company is not accurate on its reserving practices, it can display inaccurate financial data misleading investors.

They would be hit with a huge penalty from the Federal Trade Commission for misrepresentation of their financial data. Therefore, insurance companies are very careful in reserving your bodily injury claim, and your adjuster must be accurate in doing this.

The claim adjuster will have his supervisor making sure that the reserving amounts are accurate and that they are presented in a timely manner.

Why is this important and does this affect your claim?


The insurance adjuster must reserve the claim seven days from learning about the injury.

How does an adjuster reserve a claim?

She simply puts a value on your injury that she believe the claim would settle for. She would put the worst case scenario she believes the claim would go for without being unrealistic.

She draws information from the original recorded statements and the facts of the accident. She would know by then if she was dealing with a permanent injury, a soft tissue injury, or a possible fatality. If the impact was not too bad, then the reserving amount would reflect that.

The reserving value is a pure speculation of what the case will settle for. When will the claim settle? It could take two years to settle, but 90% of the time the reserving amount will remain the same.

Insurance adjusters earn their performance reviews by being accurate when reserving and settling within the set amount. They are penalized by “reserve stepping”.

Reserve stepping is when the adjuster reserves must be adjusted up or down because the claim requires her to do that (the injury was worse than anticipated).

This is one of the reasons a claim adjuster will not want to settle a claim for $10,000 if she had set the reserve at $9,000.

She would fight very hard to settle the claim for under $9,000 so she does not have to adjust the reserve and have to explain why she was inaccurate and be penalized later on. If the claim adjuster makes a mistake when reserving bodily injury claims, then the settlement negotiations will drag for a long time.


Why is this troubling? The answer is quite simple. The claim adjuster is not looking at the severity of the injury and/or the facts of the accident. They are looking to settle the claim within the amounts she decided in the first seven days of the life of the claim.

Understanding how adjusters handle reserves for each exposure will tell you how insurance adjusters truly evaluate bodily injury claims.

Insurance companies are not on your side. You can either get this personal injury eBook or talk to a personal injury attorney before you make any decisions!


Follow the links below for more information about accident injuries, bodily injury claims, and what to ask when making this type of claim.

Bodily Injury Overview

1. Who can make a bodily injury claim
2. Reserving your bodily injury claim

3. Soft Tissue Claim Part I

Soft Tissue Claim Part II

4. Permanent Injury Claim
5. Medical bills, medicine, expenses
6. Loss of Wages
7. Loss of Earning Capacity
8. Loss of Business Income
9. Loss of Consortium
10. Loss of Quality of Life
11. Loss of Essential Services
12. Future Treatment and Expenses
13. Pain and Suffering
14. Prior Injuries
15. Psychological Injuries
16. Personal Injury Claim Settlement (evaluation of a claim)
17. Car Accident Injury Claim and Burden of Proof
18. What affects compensation for back and other injury claims
19. A word about Head Injuries

Making a Personal Injury Claim: Steps 1 to 5
Making a Personal Injury Claim: Steps 6 to 10
Pain and Suffering Reimbursement
Damages Calculation

Injury Demand Letter - How to write one
When to write an Injury Settlement Demand Letter
The Actual Injury Demand Letter (Format)

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