How Insurance Companies Compensate for Pain and Suffering

Pain and suffering is difficult to calculate - here's how insurance companies do it.

“Pain and suffering.” It’s a term most of us are familiar with in regards to insurance claims and lawsuits – but what does it mean? And how do insurance adjusters determine the insurance compensation for pain and suffering? Here’s what you need to know about this common category of damages.

What is Pain and Suffering?

After an accident or a work injury, some damages are easy to prove. You can document vehicle damage and medical bills, for example. The same goes for prescription and medical costs. But what about pain and suffering, which is less tangible than other types of damages?

Pain and suffering refers to the emotional, physical, and psychic stress associated with an accident and its subsequent recovery. 

For example, if a driver was involved in a severe car accident and suffered post-traumatic stress disorder (PTSD) after the fact, the law may allow the claimant to collect damages to cover the discomfort of the experience, and the impact it had on the person’s lifestyle. If the claimant suffers lifelong damage as a result of the accident, they may be able to claim ongoing lost wages and more. 

General vs. Special Damages

In the world of personal injury lawsuits, damages are either “general” or “special.” General damages are the damages that aren’t monetary. This is where pain and suffering come in.

General damages include trauma, loss of consortium, and mental anguish. Since general damages don’t include tangible bills, they can be difficult to seek compensation for. Regardless, they are still losses for which an injured person deserves compensation.

Special damages, meanwhile, are damages that have a monetary value. These include lost wages, medical expenses, vehicle damage, and more. Most personal injury claims involve a mixture of general and special damages. 

How Does a Company Calculate the Insurance Compensation for Pain and Suffering?

Because general damages are so intangible, there is no one-size-fits-all rule for defining compensation. Instead, there are two primary methods to calculate compensation. These are as follows:

Method 1: Simple Multiplication

The company multiplies the plaintiff’s actual damages (tangibles including medical bills and lost wages) by a number between 1 and 5 (depending on the seriousness of the injury).

For example, if a claimant has $2,000 in medical bills for a broken leg, the insurance company might multiply that by three, and decide that $6,000 is a reasonable settlement for general damages.  

Method 2: Per Diem Amount

Method two involves the use of a “per diem” amount. With this method, the insurance company assigns a specific dollar amount – $150, for example – to the plaintiff for every day of the post-recovery period, until maximum recovery. 

Despite the widespread use of these methods, insurance companies do not have to use them to calculate general damages. Today, many insurance companies use computer programs to determine settlements and award claims. 

How do you Prove Pain and Suffering?

To collect general damage benefits, you must first prove your case. With pain and suffering, this can be a complicated process. Again, pain and suffering are intangible and proving it requires collecting as much evidence as possible.

Here’s Nolo’s recommendation on proving pain and suffering:

“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.”

Again, proving general damages can be a complex process. If you’ve been involved in an accident and want to prove your case, hiring a skilled personal injury attorney is your first line of defense. 

Securing Compensation for Your Pain and Suffering

Pain and suffering is a genuine form of damage, and you deserve to be compensated for it. If you’ve been in an accident and need assistance securing a settlement, contact McGrady Law. Philip McGrady is a skilled Montana injury and accident lawyer, here to help you obtain the compensation you deserve.