The exact amount insurance will pay for a personal injury claim varies significantly as it depends on numerous factors, including the severity of the injury, the total medical expenses incurred, lost wages, and the specific circumstances of the incident. However, personal injury claims typically encompass two main categories of damages: economic and non-economic.
Understanding Personal Injury Damages
To determine the total compensation, insurance companies assess both the quantifiable financial losses and the less tangible impacts of the injury.
1. Economic Damages
These are the measurable financial losses incurred due to the injury. They are often straightforward to calculate and include:
- Medical Bills: Costs for hospital stays, doctor visits, surgeries, medications, physical therapy, and future medical expenses.
- Lost Wages: Income lost due to time off work for recovery or medical appointments.
- Loss of Earning Capacity: Compensation for a reduced ability to earn income in the future due to permanent injury.
- Property Damage: Costs to repair or replace damaged property related to the incident (e.g., vehicle repair after a car accident).
- Other Out-of-Pocket Expenses: Any other verifiable costs directly resulting from the injury, such as transportation to medical appointments or assistive devices.
2. Non-Economic Damages
These damages compensate for the subjective, non-monetary losses experienced by the injured party. They are more challenging to quantify but are a crucial component of many personal injury claims. Common non-economic damages include:
- Pain and Suffering: Compensation for the physical pain and emotional distress caused by the injury.
- Emotional Trauma: Including anxiety, depression, fear, or post-traumatic stress disorder (PTSD).
- Loss of Enjoyment of Life: Compensation for the inability to participate in hobbies, activities, or daily routines that were enjoyed before the injury.
- Disfigurement: Compensation for permanent scarring or changes to appearance.
How Non-Economic Damages are Calculated
Insurance companies often use a specific method to calculate pain and suffering and other non-economic damages. This commonly involves using a "multiplier" applied to the total sum of the claimant's medical bills.
Multiplier Method Explained:
The sum of all medical bills serves as a base figure. This figure is then multiplied by a certain number, which typically ranges from 1.5 to 5 (or higher) depending on the severity and impact of the injury.
- Minor Injuries: For injuries considered minor, where recovery is relatively quick and the impact on daily life is temporary, the medical expenses are usually multiplied by a factor ranging from 1.5 to 3.
- Severe Injuries: For more severe injuries involving extensive treatment, long-term recovery, permanent disability, or significant impact on quality of life, a higher multiplier (e.g., 4, 5, or even more) may be applied.
Example Calculation (for Minor Injury):
If a claimant incurs $5,000 in medical bills for a minor injury:
- Low-End Estimate: $5,000 (Medical Bills) x 1.5 (Multiplier) = $7,500 (Non-Economic Damages)
- High-End Estimate: $5,000 (Medical Bills) x 3 (Multiplier) = $15,000 (Non-Economic Damages)
The final amount for non-economic damages would then be negotiated within this range, or potentially higher or lower based on specific case details. The total personal injury settlement would combine these non-economic damages with all calculated economic damages.
