How do You Calculate Pain and Suffering Damages?
Your lawyer will calculate the value of your claim in order to negotiate with the insurance company for a reasonable settlement amount. He or she may use a formula to arrive at a reasonable value.Multiplier method
One formula that is commonly used is called the multiplier method. This involves the following:
Take the past and future medical bills times a multiplier plus the total of your economic damages to arrive at the reasonable value of your case.
The multiplier that may be used will be a number ranging from 1.5 and 5. Your attorney will choose the multiplier based on the severity of your injuries. It is common for plaintiffs and insurance companies to have different views on how high or how low of a multiplier to use. Often, the plaintiffs begin with multipliers that are a little high while the insurance companies start with multipliers that are too low.Per diem method
Your attorney may also use a type of calculation called the per diem method. This involves using a daily dollar amount from the day of the accident until the time that the plaintiff reaches his or her maximal medical improvement. Under this method, the amount chosen is a reasonable amount such as $100 per day. That amount is then multiplied by the number of days between the date of your injury and the date that you reach maximum improvement.Job description method
The job description method of calculating pain and suffering damages is less commonly used. Under this method, your pain and suffering would be written down in a similar way as a job description. For example, if you were confined to a wheelchair for six months, you would figure out how much an average person would require being paid in order to remain in a wheelchair for that amount of time.
There are many different ways that attorneys and insurance companies calculate pain and suffering damages. However, the court and the jury must agree with the way in which the amount was calculated. In major personal injury cases, focus groups are often used. Your personal injury lawyer may advise you of the calculation method that he or she will use to calculate a reasonable amount in your case.
These are certainly not all the methods attorneys use to value pain and suffering damages but, it gives you some idea of how this is analyzed.Caveat: Your damages will equal the amount of insurance coverage
In general, your total damages (including pain and suffering) will be limited by the policy limits of the defendant’s insurance policy. If the defendant in your case has a policy limit for bodily injury of $50,000, you will likely be limited to that amount. This is because all insurance companies require a complete release of their insured in exchange for payment of the policy limit. However, there are exceptions such as requiring some personal contribution from the insured or when there are additional insurance policies available. One common example is an “umbrella” policy that may provide additional coverage (usually up to $1 million). California law also provides a method for potentially requiring the insurance company to pay a judgment in excess of their limit if a reasonable policy limit demand was made and rejected by the insurance carrier. (See prior discussion here).