If you’ve been injured in an accident, your mind is likely reeling with questions. How will you pay for your medical bills? How much time will you miss from work and how will you compensate for lost wages? What recourse is there for the parties responsible? A personal injury settlement can account for these questions and more. A settlement can provide you with the tools to pay off your bills and live comfortably while you heal. But how do car accident lawyers decide what your settlement should be?
Parts of a Personal Injury Settlement
In general, personal injury claims are comprised of two types of settlements, called “damages”:
- Economic, or special damages, are easy to calculate. They include your medical bills, your lost wages, and any other expenses associated with your rehabilitation and recovery.
- General damages address intangible losses from the accident. These may be called emotional damages, loss of consortium, or pain and suffering.
How Do We Calculate Pain and Suffering?
To some, it may seem odd to put a number on pain and suffering. If you’re the one sitting in the hospital bed, you may think there’s no amount that can properly address what you’re feeling and going through. While that may be true, attorneys do use a couple of specific formulas to calculate a fair settlement for your pain and suffering.
The Multiplier Method
The most commonly used method by the insurance companies is known as “the multiplier method.” Simply, this equation adds all of your special damages and multiplies it by a number from 1.5-5. Your multiplier will depend on the degree of your pain and suffering, as well as a host of other factors: your likelihood of making a speedy recovery, the impact on your day-to-day activities, and the degree of fault are all examples.
The multiplier is usually a sticking point in negotiations: the injured party will want a higher multiplier, while the insurance company will fight to keep the multiplier as low as possible.
The “Per Diem” Approach
The second method, which isn’t as common, is the “per diem,” or daily rate. The idea behind this method is to ask for a flat dollar amount for every day you’ve suffered. The trouble with this method is justifying your daily rate. Lawyers who use the daily rate start with a number comparable with your daily work earnings: the argument here is your suffering is at least as comparable to the effort you put into your job every day.
This concept is better illustrated with an example. Say you were involved in a car accident and broke a leg. You were in a cast for two months and required an additional month of rehabilitation. You were “suffering” for a total of 90 days. Let’s also assume you earn $50,000 a year at your job, or $200 a day based on a standard workweek. So, your per diem “pain and suffering” settlement would be $18,000.
Which Method Is Better?
There’s no hard and fast rule dictating which method you choose to calculate general damages. Your legal team might start by running both calculations and seeing which number is larger. You may get wildly different results, but that’s okay. These calculations are only a “jumping off” point: you’ll reach an actual settlement in the negotiation process.
One thing you can do is to be thorough in your medical records. Be sure to tell your providers about all the symptoms you’re experiencing. The more tangible evidence of your pain and suffering, the more likely you are to reach a fair settlement. Contact an injury lawyer to see how else you can help your case.