Televised legal dramas often show verdicts where a car accident victim in a civil case is awarded an additional sum for their “pain and suffering.”
This dollar amount is meant to compensate you for damages that can’t be easily calculated by adding up all the bills and tangible financial losses after an accident.
For example, how does one determine the right amount of compensation for a permanent injury, the death of a loved one, or being able to care for a child for weeks or months during a recovery? Adding pain and suffering to an injury claim is an attempt to make a victim whole by compensating them for physical pain as well as mental health and mental anguish. Determining the amount of pain and suffering varies from case to case, and always depends on the severity of a person’s injuries. The more severe the injury, the more substantial the medical treatment, the higher the value of pain and suffering. For example, a car wreck victim who has neck surgery, a long recovery, and permanent restrictions will have a higher pain and suffering value than a client who has sprain/strain injuries and makes a full recovery with conservative treatment.
Types of Damages
When determining the amount of a settlement, there are two types of damages for which a victim may be compensated:
1. Economic Damages – These may include, but are not limited to, past and future medical bills, mental health treatment costs, lost wages and earning capacity, property damage, and household services.
2. Non-economic Damages – Also referred to as general damages, this compensation is for pain and suffering damages. Pain and suffering can be both physical and emotional.
Though economic damages can be quantified, pain and suffering can be more challenging to pinpoint. After all, there’s no way to definitely say how much your stress, interruption in daily life, physical pain, or emotional pain is worth.
How to Calculate Pain Suffering
There is no magic formula to calculate pain and suffering. An experienced personal injury lawyer will consider each case differently, looking at all the evidence related to both liability and fault as well as injuries and medical treatment. Insurance companies look at it differently, they do not look at the individual aspect of each case but rather have formulas to calculate your pain and suffering when offering a settlement.
Both insurance companies and courts have formulas to calculate your pain and suffering when offering a settlement.
Specifically, there are two methods commonly used by insurance companies.
1. Multiplier Method – This formula multiplies the total amount of your determinable economic damages and multiplies it by a number. This number varies between insurance companies.
An insurance company will assign a multiplier by evaluating your individual circumstances, such as the extent of your injuries, the impact they have on your life, and how quickly (and if) you’ll recover.
As you can imagine, this range can result in a wide disparity in compensation, so being able to negotiate the multiplier is crucial.
For example, if you have $300,000 in economic damages, a 1.5 multiplier would yield $450,000, while a 5x multiplier would give you $1.5 million.
2. “Per Diem” Method – Per diem is the Latin translation for “per day.” This formula assigns a daily rate for your pain and suffering and multiplies that figure by a specific number of days.
As you can see, there are a couple of subjective factors in this calculation. The insurance company will have to figure out the amount of your daily rate and the timeframe of your recovery.
Typically, the number of days is how long you’ll experience the pain and suffering from the accident. This could be the physical recovery time, which may be months or years, or it could be for the rest of your life in the event of losing a loved one or a permanent injury or disfigurement.
The “per diem” amount is customarily the amount of money you would earn each day in your job. The idea is to compensate you, the victim, with something that’s comparable to you making the effort of your daily grind.
Let’s illustrate this calculation with an example.
Imagine a negligent driver collided with your vehicle head-on, and you suffered a broken leg that required surgery. You were immobilized for six months, had to take pain medication, and had to cancel a family vacation.
If your current salary is $60,000, then your daily rate (taking into account 250 working days per year) is $240. Multiply $240 by 180 days to get a pain and suffering settlement of $43,200.
When the pain and suffering are short-term, this formula can be relatively straightforward.
However, longer term and permanent injuries add several layers of complexity to a pain and suffering settlement.
For example, how is the time value of money accounted for? Should the “per diem” rate increase over time to account for an increase in earnings potential, or should it remain static? Having a skilled negotiator in your corner, especially in these situations, can make a drastic difference in the outcome of the settlement.
At the law firm of Bryan Garrett, we’ll compassionately look at all possible scenarios to determine what we think would be a fair and reasonable pain and suffering settlement, including our experience with past verdicts and other settlement deals. Call us today at (405) 839-8424 for a free consultation.