When you claim compensation for car accident injuries, medical bills are frequently not the only losses you can claim for. Depending on the circumstances you may also claim compensation for lost earnings, incidental expenses such as travel and day care, and pain and suffering. In many cases, damages awarded for pain and suffering exceed the total of all other damages combined. Pain and suffering damages are calculated in two main ways: the multiplier method and the “per diem” method.
The Multiplier Method
Calculating pain and suffering damages using the multiplier method is based on multiplying the sum total of your economic damages (medical bills plus lost earnings, for example) by a multiplier. Traditionally, this multiplier has been three, although it can be more or less. Suppose your multiplier is three, for example. If your economic damages were $40,000, for example, then your pain and suffering damages would be $40,000 x 3 = $120,000, and your total damages would be ($40,000 + $120,000) = $160,000.
An insurance company may apply a complex mathematical formula to calculate your multiplier by taking into account certain adjustment factors (please see below for details). Unsurprisingly, when it is the insurance company that performs the calculation, this method usually results in a total that is considerably less than what you would have calculated yourself. That is why you need an experienced personal injury lawyer to negotiate your damages. In most cases, the lawyer will be able to get you more money than you can if you try to negotiate directly with the insurance company. This is true even after you take the lawyer’s contingent fee into account.
The “Per Diem” Method
“Per diem” means “per day”. Calculating pain and suffering damages using the “per diem” method means calculating the total as if you were being paid a daily wage for pain and suffering. The per diem figure is highly sensitive to how long you were in pain after the accident (how long you took pain medication, for example). You might demand $150 to $250 per day, although there is no definite figure that applies to every case. Again, a lawyer will be able to help you maximize your damages.
Adjustment Factors
Adjustment factors are facts about your individual case that can raise or lower your multiplier or your per diem amount. They may be applied by the insurance company or by your own personal injury lawyer. Some examples are:
- Your injuries were long-term or permanent (this should significantly add to the amount of your claim)
- The severity of your injuries – did you come close to death, for example?
- How long you were in the hospital or out of work
- To what extent the accident was partially your fault
- Whether the other driver was intoxicated or acting outrageously (drag racing, for example)
Example
Suppose you were involved in a two-car accident that was approximately 10 percent your fault. Your medical bills were $2,000, while your lost earnings were $4,000, and you incurred child care expenses of $1,000. The other driver was arrested for DUI after the accident.
Using the multiplier method: Your total economic damages are $7,000 ($2,000 + $4,000 + $1,000). The fact that the accident was partially your fault might reduce your multiplier to 2.5. The fact that the other driver was drunk might increase your multiplier from 2.5 to 4. If you are able to negotiate this (or convince a court in a lawsuit), your pain and suffering damages would be $7,000 (economic damages) x 4 (multiplier) = $28,000, and your total damages would be ($7,000 + $28,000) = $35,000.
Using the per diem method: Using the above example, if you were on pain medication for 90 days, a standard per diem calculation might add up to (90 days x $200/day) = $18,000. Your part in the accident might lower your per diem rate to $150, while the fact that the other driver was intoxicated might kick it all the way up to $300, resulting in pain and suffering damages of (90 days x $300/day) = $27,000. Your total damages would then be ($7,000 + $27,000) = $34,000.
As you can see, you can arrive at more or less the same figure using either of these two methods. What is most important is that your calculation is convincing to an insurance company or (if necessary) a jury.