Posted on May 25, 2020
Insurance is the agreement in which an individual or entity acquires financial safety or compensation against losses from an insurance company. You can claim damages for economic losses like medical expenses and property damages and non-economic losses e.g. pain and suffering. This damage cannot be easily calculated. Insurance companies usually calculated pain and suffering injuries by two methods: the Per Diem method and the Multiplier method.
How do we define pain and suffering?
Pain and suffering are non-economic losses that cannot be easily calculated. If a person suffers physical and psychological pain as a result of any mishap it will be known as pain and suffering. This damage is difficult to evaluate because you do not always pay for their compensation. That’s why insurance companies do not use paper files to evaluate them.
In case of any mishap or accident, that injury or pain you bear can be harmful and long term. The continuous pain that your actual injuries cause you can be compensated by physical pain and suffering damages. The continuous pain, irritation, permanent dysfunction of any body part, and many other dangerous effects that physical pain and suffering damages will cause you in the future.
Injuries you suffer are not always physical. It can be your mental pain and suffering as well which include psychological consequences like disturbance, tension, emotional distress, fear, loss of quality of life, etc. It can also be claimed by post-traumatic stress disorder like sadness etc. Pain and sufferings calculations are done by the methods described below.
How much do insurance companies pay for pain and suffering?
From these two methods, we can calculate pain and suffering.
Per Diem method:
One of the methods used by insurance companies is the daily rate method or Per Diem method. In this method, companies set an amount for each day or a week till you continue to bear from your damage. Different companies use different calculations. We can guess that amount by using our daily income. Amount can be increased in case of serious or permanent injuries. For example, you bear continuous pain and cannot go to work for 5 months or 150 days, you have a per diem amount of $250. Then you will get $37500 in pain and suffering damages.
Another method that is used by insurance companies is the Multiplier method. In this method, companies multiply your economic or visible loss by a fixed number. Companies usually use software for this method, while personal injury lawyers in Fort Lee and many other attorneys use multipliers of 3. For example, if you didn’t have major injuries, then your multiplier will be 1. If your total loss will be $2000, you will get an additional $2000 on it. In other cases, if your injury is serious, your multiplier would be 3. If your economic loss will be $70000, then you could get $210000 in pain and suffering.
Insurance is basically our safety from financial loss. You can buy multiple insurance policies to secure your future. It is also a risk for our investment. It is very much important to know what each type of insurance covers and how it works so that you can make better decisions for your future. People mostly say that they can’t afford insurance but they can afford but don’t want to. So don’t waste your money on an investment that is useless for your future. Invest in the right policies so that it can protect you and your family from different accidents, mishaps, or disasters and also from pain and suffering.