Anytime a person sustains an injury caused by the careless or negligent actions of others, they need to be able to recover compensation for their losses. This includes compensation for medical bills, lost wages, and property damage expenses. Additionally, pain and suffering damages are often available to victims. It is important to understand how insurance carriers determine the dollar value of pain and suffering damages to pay as part of a settlement of a personal injury claim.
Using a Multiplier Method to Calculate Pain and Suffering
One of the most common ways that injury victims and their attorneys calculate pain and suffering damages is by using a “multiplier method.”
This method may seem a little complicated if you have not had to deal with this type of lawsuit before, but we can break it down in a way that makes sense. Allow us to use relatively simple numbers, but please understand that accident claims typically do not involve figures this cut and dry. We strongly encourage you to work with an attorney when calculating exact pain and suffering damages.
Suppose a person sustains $100,000 worth of calculable economic expenses as a result of their vehicle accident. These expenses would include medical bills, lost wages, property damage expenses, out-of-pocket losses, and any other expenses that can be added up with bills or receipts that come in after the incident occurs.
In order to calculate non-economic or pain and suffering losses out of this figure, an attorney will typically use a multiplier ranging anywhere from 1.5 to 5. Suppose, for the example we are discussing, that an attorney chooses to use a multiplier of “three.” In this circumstance, they would take the $100,000 and multiply that by “three” to reach a pain and suffering total of $300,000.
Overall, they would add these totals together to reach $400,000 for a settlement.
Using a Per Diem Method to Calculate Pain and Suffering
Another method that may be used is the “per diem” method. In Latin, per diem means “per day,” so we will be working to calculate a certain dollar amount for every day a person is expected to experience pain and suffering following an injury caused by another party.
In order to come up with an adequate daily amount, an injury victim in their attorney will need to discover what daily amount is considered “reasonable,” which means making it close to the actual daily earnings. For example, let us suppose an individual typically makes $500 a day and is expected to experience pain and suffering for one year. In this situation, $500 would be multiplied by 365 days to reach a pain and suffering total of $182,500. Adjustments will be made to factor in time off, but even “off days” could result in some compensation because pain and suffering does not stop on the weekends or holidays.
Insurance Carriers Will Resist
You can be certain that insurance carriers will do anything they can to limit how much they payout in a settlement, particularly when it comes to seemingly arbitrary pain and suffering numbers. However, pain and suffering is not imaginary – it is real. When a person sustains an injury caused by another individual, they should be able to recover compensation for their calculable losses as well as the more immeasurable non-economic losses. A skilled personal injury lawyer will work diligently to investigate the injury claim and stand up to aggressive insurance carriers when working to recover total compensation for their client.