How Insurance Companies Calculate Pain and Suffering
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How Insurance Companies Calculate Pain and Suffering

Suffering an injury can leave you with much more than medical bills. While you can pursue compensation for these damages during a personal injury lawsuit you can also seek damages for any physical and mental pain you’ve experienced. However, unlike your medical bills and lost wages, it can be harder to put a monetary value on these intangible aspects. So how do courts and insurance companies calculate pain and suffering damages?

What Is Pain and Suffering?

“Pain and suffering” refers to a broad range of damages a plaintiff may suffer due to an accident. As the name suggests, these damages try to provide a form of monetary compensation for pain experienced. These damages can include:

  • Physical pain
  • Grief
  • Worry
  • Loss of enjoyment of life
  • Stress
  • Fear
  • Insomnia
  • Loss of a loved one
  • Other emotional and mental damages

If you have a personal injury claim where you can prove that the other party was responsible for your damages, you may also be compensated for past or future pain and suffering damages. Depending on the scope of your case, the total for pain and suffering may be a minimal part of your compensation, or it may amount to a sizable portion.

How Can You Calculate Pain and Suffering?

Since there is no concrete monetary amount you can place on pain and suffering, the challenge becomes determining a “fair” amount for these types of damages. Courts also do not enforce a strict rule for how to calculate pain and suffering. However, courts and personal injury attorneys alike commonly use one of two methods:

Multiplier Method

The multiplier method works by taking the material damages of the case (primarily medical bills and lost wages) and multiplying them by a number, depending on the severity of the injury. A minor injury that is almost entirely or fully recovered will likely receive a multiplier of one, while an injury that will have a lifelong impact will likely receive a higher multiplier, such as five. Most pain and suffering calculations with this method do not use any factors greater than five.

Per Diem Method

As the Latin in the name suggests, the per diem method works by determining a “per day” amount for the pain and suffering, then multiplying it by the expected length of suffering due to the injury. For example, if your injury was expected to take a month to recover, your per diem compensation would amount to your daily compensation times the thirty days of the month.

The difficulty with this method is determining what your fair per diem amount is. One of the most commonly accepted methods is to set the daily value to what you earn in a day of work, as the effort of enduring pain and suffering can be equivalent to one day at work. So, if you earned $100 per day in the above example, you could expect your pain and suffering damages for the month to equal $3,000.

Other Methods

While many attorneys will use multiplier and per diem calculations, insurance companies have no obligation to use the same methods. Insurance companies may be willing to work with these methods, but they prefer having lower payouts. Some companies even have programs that automatically calculate the pain and suffering value – often for less than what you may be able to recover under the law.

Determining Fair Compensation for Pain and Suffering

At the start of your claim and throughout your case, you will likely hear from the other party’s insurance company, offering you a settlement. It can be challenging enough to account for potential future financial compensation, let alone understand your full entitlement for pain and suffering. Working with an experienced accident attorney is the best way to ensure that you’re receiving fair compensation for all your damages.