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How Insurance Companies Determine Pain and Suffering Damages

Posted on 08/18/22

Determining pain and suffering after an injury occurs is important. Yes, even though most people understand that injury victims will recover compensation for tangible expenses like medical bills and lost wages, just as important are pain and suffering damages. However, calculating pain and suffering can be challenging because there are not typically bills or receipts that can be added up. Here, we want to discuss how insurance carriers typically calculate these types of losses.

Insurance Carriers and the Aversion to Paying Fair Compensation

When working to recover compensation after an injury caused by the negligence of another party, it is important to understand that insurance carriers are looking to pay as little as possible. Often, this means limiting, or attempting to limit, how much money a person receives for pain and suffering, particularly because these damages are not necessarily calculable by using direct bills or receipts. Pain and suffering losses are related to more immeasurable factors, such as physical pain and suffering, emotional and psychological trauma, and post-traumatic stress disorder (PTSD).

The Multiplier Method

The most common method used to calculate pain and suffering damages is referred to as the multiplier method. This involves adding up all of the economic losses related to the injury. This includes medical bills, lost wages, out-of-pocket expenses, etc.).

After gathering the economic total, this dollar figure will typically be multiplied by a set number, usually a number ranging anywhere from 1.5 to 5. For example, if a person sustains $150,000 worth of economic damages, an attorney or insurance carrier may use a multiplier of three to reach a non-economic total of $450,000.

The Per Diem Method

Alternatively, the per diem method may be used if the multiplier method is not sufficient for some reason. Per diem means “per day,” and an attorney or insurance carrier will assign a dollar value to each day that a person is expected to experience the pain and suffering established in the case. For example, if the insurance carrier assigns $200 as the per diem amount and they expect the individual to experience this pain and suffering for an entire year, the math would include $200 multiplied by 365, which would amount to $73,000 in economic damages.

Working With an Attorney

Any individual who sustains an injury or property damage caused by the negligence of another individual or entity needs to work with a skilled attorney as soon as possible. A lawyer will examine every fact and piece of evidence related to the case, and they will enlist assistance from trusted medical and economic experts who can help adequately calculate total expected losses.

As we mentioned above, insurance carriers are going to look for ways to undercut the final settlement amount, and one of the main areas they do this is by undercutting pain and suffering damages. A West Chester personal injury attorney will negotiate with the insurance carriers in order to help their client recover maximum compensation.

In the event the insurance carrier refuses to offer a fair settlement, either for economic damages or pain and suffering losses, it may be necessary to file a civil personal injury lawsuit against the add fall party to pursue compensation through a jury trial.