How do Insurance Companies Calculate Pain and Suffering Reimbursement in California?

Handing over Insurance Settlement
It is a cornerstone of California personal injury law that victims can receive compensation for their losses. In some situations, these losses are easy to calculate. For example, a personal injury victim can typically receive compensation for their past, present, and future medical care, as well as for lost wages.

Our clients can also receive money for pain and suffering. Under California law, pain and suffering includes things like physical pain, loss of enjoyment of life, physical impairment, mental suffering or emotional distress, disfigurement, and anxiety.

Unlike lost wages or medical treatment, there is no bill or receipt attached to pain and suffering, which makes it harder to quantify. Nevertheless, insurance companies are very experienced at coming up with a number to offer.

How an Insurance Company Calculates Pain and Suffering Damages

There is no single method an insurance company will use to estimate the amount of money to offer you for pain and suffering. Instead, companies rely on their experience settling claims.

Indeed, many companies have huge databases full of information about how much compensation they offered to different people based on different injuries. It is not unusual for an insurance company to plug your information into a computer program, which then spits out a number.

What information does an insurance company use? Typically, they will look at the following:

  • The type of injury you suffered. A permanent injury causes more suffering than one that clears up in a month or two.
  • The amount of medical treatment you have received. If you have been receiving care for six months, then your pain and suffering is probably more severe than if you went to the doctor once.
  • Who you received medical treatment from. Getting treatment from a doctor signals that the injury is more serious than if you saw a chiropractor, for instance.

For example, you might have suffered a broken bone, concussion, and nerve damage in your arm. For treatment, you spent a night in the hospital for the concussion and received rehabilitation for six months to regain functioning in your arm and hand. The insurance company will plug this information into a computer to find out how much to offer you.

How a Car Accident Lawyer Estimates Pain and Suffering Damages

There are two methods that lawyers regularly use to determine how much a client can receive in pain and suffering.

The Multiplier Method

One method is called the “multiplier method.” This involves adding up your economic losses—medical care and lost wages—and then multiplying that amount by a factor of 1 to 5. This then gives the attorney an amount for pain and suffering, which is then added back in with the economic losses.

The multiplier used typically depends on the seriousness of the physical injury. For example, someone with a bad bruise and a sprain might use a multiplier of 2. If it cost $3,000 to treat the injury, then this amount is multiplied by 2 to give $6,000 in pain and suffering. Overall, this client might receive $9,000 in total compensation.

However, if someone has suffered a more serious injury, their multiplier will be higher. For example, someone who is permanently paralyzed might have a multiplier of 5.

The Per Diem Method

The second method is the “per diem” method. A certain dollar amount is assigned for each day in which the person is injured, say $150. If it took 30 days before the person reached medical improvement, then an Orange County car accident lawyer multiplies the number of days by the per diem amount (30 times $150). In this example, the victim might receive $4,500 in total for pain and suffering.

How We Calculate Pain and Suffering Damages

At RMD Law, we don’t use computer programs like insurance companies. Instead, we take a more individualized approach to calculating pain and suffering compensation.

We look at the big picture and consider:

  • How your physical injuries have affected you emotionally
  • How your injuries have disrupted your life
  • Whether you can pursue favorite hobbies or whether your injuries prevent you from enjoying them
  • Whether your injuries have impaired your relationships with family and friends

Jurors often understand the pain someone will feel if they can no longer play with their grandchildren or go for a walk with their spouse. When the pain and suffering are made vivid, jurors are more willing to award compensation to make up for these intangible losses.

Generally, the greater the decrease in your quality of life, the more compensation you should receive. To help build your case for pain and suffering damages, we will work with you to carefully document how the injuries have impacted your life.

In some situations, this will involve having you keep a pain journal in which you document where you feel the pain and how it has limited your daily activities. We might also speak to family and friends who can offer testimony about how your life has changed after the accident.

Limits on Pain and Suffering

One obvious limit to the amount of compensation you can receive is the limit on the defendant’s insurance policy. If the defendant has only $15,000 in liability coverage (the state minimum for auto liability coverage), then you cannot expect to sue and receive $150,000.

In some situations, a defendant might have other assets that you can reach by bringing a lawsuit, but that is rare. Practically speaking, the insurance policy limit will serve as the ceiling for any financial recovery that you receive unless you can identify another defendant who has deeper pockets.

RMD Law is Here for You

After an accident, injured victims need compensation to help them recover financially. Pain and suffering damages are an important part of any settlement, so you should carefully document them as best you can.

At RMD Law, we do everything possible to maximize the amount of compensation you can receive. We are very pleased to have obtained favorable settlements and verdicts on behalf of our clients, and we are anxious to go to work for you, too.

To schedule your free consultation, please reach out to us today by calling (949) 326-5000 or contact us online.

Aria Miran
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