How Much Do Insurance Companies Pay for Pain and Suffering?

Are you going through the insurance claims process to receive compensation for your car accident? You may wonder what other costs are involved in your claim. In Montana, you can claim compensatory damages for economic losses, such as medical expenses and property damages. You can also claim damages for non-economic losses, namely pain, and suffering. This non-economic damage can be difficult to calculate; however, insurance companies have two methods for determining this payout.

What Is Pain and Suffering?

Pain and suffering refer to the physical or emotional pain a person suffers as the result of an accident. This damage is difficult to quantify because you do not always pay bills to compensate for it, so insurance companies cannot use a paper trail to calculate it.

When you suffer injuries in an accident, you may develop permanent impairment and chronic pain. Physical pain and suffering damages compensate for the ongoing pain that your actual injuries cause you. It can include ongoing pain and discomfort, permanent disability and impairment, and any other adverse effects the injuries will cause you in the future.

Not all of the injuries you suffer in an accident are physical, however. Mental pain and suffering refer to the emotional trauma you may face as a result of your injuries. This damage can include shock, anxiety, emotional distress, loss of quality of life, humiliation, loss of enjoyment of life, fear, anger, and mental anguish. You can also claim these damages for post-traumatic stress disorder, depression, mood swings, sleep disturbances, and lack of energy.

Since you cannot quantify these damages, it can be difficult to determine how much compensation you should receive for pain and suffering. Insurance companies usually calculate pain and suffering damages through one of two methods: the daily rate method or the multiplier method.

Method #1: The Daily Rate Method

One of the methods insurance companies use to determine pain and suffering is the daily rate method or the per diem method. Under this system, companies assign a sum of money for each day or week you continue to suffer from your injuries. Each company can use a different calculation; to estimate your daily rate amount, you could use your daily income. More severe accidents, permanent injuries, and aggravating factors can increase this amount.

For example, say that you suffer temporarily disabling injuries in a car accident and have to miss work to recover. You suffer from chronic pain and an inability to move during this time. You miss working for four months or a total of 120 days. You have a per diem amount of $200. You will receive $24,000 in pain and suffering damages.

Method #2: The Multiplier Method

Another method that insurance companies can employ to compensate for pain and suffering is known as the multiplier method. Using this calculation, insurance companies multiply your economic, tangible damages, such as medical expenses, by a certain number. Insurance companies often use a software program to determine the multiplying number, while personal injury attorneys usually use the standard multiplier of three.

The more severe your injuries are, the higher the number a company will use in a multiplier method. For example, if you suffer minor injuries from a fender bender, your multiplier could be 1. If your economic damages total $2,000, you could receive an additional $2,000 for pain and suffering. If you suffer severe injuries in a major car accident, your multiplier could be 4. If you have economic damages totaling $60,000, you could receive $240,000 in pain and suffering.

However, it is not in the insurance company's best interest to provide a high payout for pain and suffering. As a result, the amount may be lower than what you would need. Obtain the services of a personal injury attorney and call to assess your case and provide an independent calculation outside of the insurance company's software program.