How Does an Insurance Company Determine Pain and Suffering Damages?

There are no strict rules for putting a dollar value on pain and suffering in a personal injury case, but here's what an insurance company might consider.

If you have been injured because of someone else's carelessness, you can usually seek compensation from the at-fault party's insurance company, by filing what's called a third-party claim.

After establishing that the defendant is the one responsible for your injuries (liable), you will also need to present evidence of all your losses associated with the incident (called "damages" in legalese). The insurance company should compensate you for your medical expenses as well as any lost wages you incur. In addition, the insurance company should provide you with some compensation for your general "pain and suffering." This article discusses when an insurance company will provide compensation for pain and suffering, and how these kinds of damages are calculated.

What is "Pain and Suffering?"

Pain and suffering is a legal term that refers to a host of injuries that a plaintiff may suffer as a result of an accident. It encompasses not just physical pain, but also emotional and mental injuries such as fear, insomnia, grief, worry, inconvenience, and even the loss of the enjoyment of life.

In almost every injury case, the plaintiff should be able to recover some amount, even if rather small—and sometimes very large—for pain and suffering damages.

How does an insurance company calculate pain and suffering damages?

There is no hard and fast rule for how an insurance company must calculate pain and suffering. Many plaintiffs' attorneys were trained to use one of two methods for calculating pain and suffering. The first method is to multiply the plaintiff's actual damages (medical bills and lost wages) by a certain number, generally between 1 and 5 (depending on the severity of the injury). For example, if a plaintiff incurs $3,000 in medical bills related to a broken arm, he might multiply that by three, and conclude that $9,000 represents a reasonable amount for pain and suffering.

The multiplier method is used in our accident settlement calculator. For more on how to get to a "reasonable" number, see this overview on determining a multiplier.

Alternatively, many plaintiffs' attorneys use a per diem (Latin for "per day") approach. Under this method, a certain amount—perhaps $100.00—is paid for every day from the day of the accident until the plaintiff reached maximum recovery.

Insurance companies are under no obligation to consider these types of methods in calculating pain and suffering. Many companies use computer programs to determine what amount of a settlement offer should be allotted for pain and suffering. These programs often take into account not just the type of injury, but also the type of medical treatment the claimant sought.

For example, insurance companies usually consider medical treatment by a physician to signify a more serious and compensable injury than treatment by a chiropractor. Insurance companies also take into account the length of time the claimant sought treatment. If treatment seems excessive for the type of injury, the insurance company will not include all of the treatment in its calculation of pain and suffering.

Proving Pain and Suffering

Damages for pain and suffering are recoverable, but how are they proven? Proof of this type of injury may take many forms and the more evidence you have to support your claim, the better your chance will be of recovering an amount you find satisfactory.

The extent of your injury and accompanying pain and suffering can be evidenced through documentation such as photographs and personal journals that record the plaintiff's physical and emotional feelings. Documentation from friends and family can provide additional evidence of the way the particular injury has negatively impacted the plaintiff's life. Proof of treatment by a mental health professional is also helpful and is necessary where the plaintiff is claiming injuries such as increased anxiety, insomnia, or depression.

How Do You Know What's Fair?

If the insurance company makes a settlement offer that includes compensation for pain and suffering, how do you know if it's a reasonable offer? A reasonable approach is to use either the multiplier method or the per diem method to get a ballpark figure (as discussed above).

Then consider whether there were additional circumstances that might increase or decrease that amount. For instance, if your injury left you with a permanent scar on your face, it may be reasonable to increase the amount of pain and suffering you deem fair. On the other hand, a minor bump to the head that healed quickly probably is not worth all that much. Keep these factors in mind when considering how the insurance company has valued your pain and suffering, and when deciding whether the insurance company's offer is reasonable and fair.

To learn more about negotiating an injury claim, see the articles we have filed away under Settling Your Injury Claim.

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