When a person is injured in an accident, the person generally sustains damages. If another party caused the accident, the victim might be entitled to compensation for those damages.
Examples of cases in which a person might recover compensation for damages include:
- Car accidents
- Motorcycle accidents
- Nursing home abuse cases
- Pedestrian accidents
- Premises liability cases
- Product liability claims
- Boating accidents
- Bicycle accidents
Damages in a personal injury case generally include financial damages and non-economic damages. The person may be entitled to punitive damages, although it is not common in most cases. Punitive damages “punish” the person who caused the injury for gross negligence and wrongdoing.
Calculating Financial Damages in a Personal Injury Case
Financial damages are the economic losses incurred by the accident victim. Examples of financial damages include:
- Medical bills and cost of treatment
- Personal care and in-home health care
- Help with household chores
- Loss of wages, salary, and benefits
- Decreases in earning potential
- Travel expenses
- Legal costs
The value of financial damages is the actual cost of an item or financial loss. Unfortunately, calculating non-economic losses is more complicated.
Calculating Non-Economic Damages in a Personal Injury Case
Examples of pain and suffering damages include, but are not limited to:
- Physical pain
- Emotional distress, including anxiety, PTSD, and depression
- Mental anguish
- Scarring and disfigurement
- Disabilities and impairments
- Loss of enjoyment of life or quality of life
- Loss of consortium (loss of relationships with others, including spousal intimacy)
Valuing pain and suffering is challenging because a person’s experience after a car accident is unique and subjective. Each person experiences injuries differently. The same injury could cause one person great pain and distress, but another person may only suffer minor pain and inconvenience.
Because there is not a “bill” or “invoice” for calculating pain and suffering, insurance companies consider several factors when valuing pain and suffering damages:
- The type and severity of injuries the person sustained
- The overall discomfort and pain associated with those types of injuries
- The duration of the recovery
- How the injury impacted the person’s daily life, including personal relationships, work, activities, etc.
- The types of medical care required to treat the injuries
- Whether the person sustained a permanent impairment or disability that requires ongoing care and treatment
Other factors may be considered when valuing pain and suffering damages based on the facts and circumstances of the case. Unfortunately, there is not a standard formula prescribed by law to calculate pain and suffering.
Multiplier Method vs. Per Diem Method
Many insurance companies use one of two methods for calculating pain and suffering damages.
The multiplier method uses the total cost of repairing the injuries (medical bills) as a basis for the value of pain and suffering damages.
Depending on the above pain and suffering factors, the insurance company assigns a number for pain and suffering damages, usually between 1.5 and 5. Traumatic injuries, lengthy recoveries, and permanent impairments generally result in a higher multiplier.
Pain and suffering damages equal your total medical expenses multiplied by the number. For example, if your total medical bills equal $50,000, and the multiplier is two, your pain and suffering damages would be worth $100,000.
An insurance company fights to keep the multiplier as low as possible. Your personal injury lawyer builds a strong case to argue for a higher multiplier based on the above pain and suffering factors.
Per Diem Method
The per diem method is used in some cases to calculate pain and suffering damages. The per diem method involves assigning a daily rate for pain and suffering.
The value of your pain and suffering damages is the per diem multiplied by the total number of days between the date of injury and the date your doctor states you have reached maximum medical improvement. Maximum medical improvement is the point at which no further medical treatment will improve your condition.
The above pain and suffering factors are the basis for the per diem amount. Cases involving catastrophic injuries and disabilities usually have a higher per diem rate.
Working With a Personal Injury Lawyer
An insurance company has one goal – avoid paying large injury claims. Therefore, the claims adjuster is going to fight to keep the value of your pain and suffering damages as low as possible. Because pain and suffering are subjective, it can be easy for an insurance company to claim that a person is exaggerating.
Attorneys who handle personal injury cases understand how insurance companies calculate pain and suffering. They understand which factors can increase the multiplier or the per diem rate. They also know how to use medical evidence in a case to maximize the figures.
If you believe the settlement offer is low, it is a good idea to speak with a lawyer before accepting the offer. Once you settle your injury claim, you cannot pursue legal action for more money, even if you discover your damages are worth much more than the insurance company paid to settle the claim.