Having worked for a major automobile insurance company as an attorney for years handling cases involving car accidents in Philadelphia and the suburbs, I am often asked how the price for pain and suffering is calculated and how much my case is worth in a car accident or slip and fall accident. The other question I know many people ask is whether I need a Car Accident Lawyer, or can I handle the case myself.
Edith Pearce is a personal injury lawyer in Philadelphia. Call (215) 557-8686.
How Do Insurance Companies Calculate Pain and Suffering?
Under the law, there is no formula to calculate the cost of pain and suffering damages. In fact, if a case goes to trial, an attorney is not allowed to request or suggest a certain dollar amount or money for pain and suffering to the jury. So how do insurance companies come up with a figure to try and settle a case? Is there a pain and suffering settlement calculator or formula that is used? Below I will show you how many insurance companies value cases using a formula for calculating price amounts for pain and suffering damages.
First: Determine Special Damages
Personal injury damages are the amount of money awarded to the victim injured in an automobile, slip and fall or other accident. There are 2 types of damages available to be recovered in a personal injury case. They are special damages (e.g., out of pocket bills such as medical expenses, lost wages) and general damages (pain and suffering).
Special Damages:
- Medical bills
- Lost Income or Wages
- Lost or Damaged Property
Special damages are out-of-pocket expenses that you must be able to prove, by showing a specific expense or proof of lost wages you incurred due to the accident. The most obvious expenses would be income loss, medical expenses and any physical damage to an item, such as a car. In a car accident, an example for special damages would be the repair costs for the injured victim’s car. If the car was totaled, it might simply be the “Blue Book” value of the car and offering proof by using sources such as Edmunds.com, Kelley Blue Book or NADAguides.com might be sufficient.
For lost income, you may want to show your paystub, W-2, and also proof of overtime pay before the accident and medical proof that your doctor had restricted you from returning to work for a certain period of time. Medical expenses and bills, including prescriptions and drugs should be saved as part of these expenses. You should keep an expense log after your injury.
- Step 1: Add the cost of all special damages together: (Example below = $11,000)
Example: John Smith is injured in a rear end car accident, and he suffers a spine injury of an aggravation of a prior back injury and suffered a neck sprain. These are the medical bills to date:
1) Medical Expenses total Cost: $6,000 
- Emergency Room Visit Cost: $1,000
- MRI and diagnostic studies: $1,400• Family doctor (office visits) Cost: $1,200
- Orthopedist specialist consultation Cost: $500
- Physical Therapy Cost: $1,900
2. Car or Vehicle Repair at Philadelphia Auto Body Shop: $2,000
3. Lost Wages or Lost Income: 
John Smith earned $18.75 an hour working in Philadelphia as a Delivery Driver. The injured victim missed 4 weeks of work. $18.75 x 40 (hours) x 4 (weeks) = $3,000.
John Smith’s special damages (out of pocket expenses) equal $11,000 ($6,000 medical expenses + $2,000 car repair + $3,000 loss wages = $11,000.
- Step 2: Calculate pain and suffering by applying a multiplier between 2 and 5:
Under the law, pain and suffering includes several different types of damages. These damages include actual physical pain suffered by the injured victim or plaintiff, mental suffering or anguish due to the injury, humiliation or embarrassment because of the injury, disfigurement, and loss of life’s pleasures.
These types of damages are hard to put a dollar figure on. In fact, an attorney cannot suggest to a jury the amount of money that should be awarded for pain and suffering. Traditionally, insurance companies have used a multiplier to determine the value they will place on pain and suffering. The multiplier often ranges from 2 (for less serious injuries) up to 4 or 5 for very serious injuries.
- Step 3: Determine insurance company multiplier: The more severe the injury, the greater the multiplier
2: Less Serious Injury
3: More Severe Injuries Greater multiplier
4: Severe Injuries
5: Very Severe Injuries
Let’s look at our example:
In the example, John Smith, the injured victim suffered an aggravation of a back injury and neck injury. The plaintiff was out of work for one month. There was no surgery or broken bones, but the injury required several office visits, diagnostic testing (e.g., MRIs) and physical therapy. This might be classified as a more serious or serious injury and the insurance company would try to use a multiplier of 2 and possibly a maximum of 3. Using a multiplier of 2 or 3, this makes the settlement value for pain and suffering as follows: $11,000 x 2 = $22,000 or $11,000 x 3 = $33,000.
Pain and Suffering Value = $22,000 to $33,000.
So, the insurance company would probably try to settle this case in the range of $22,000 to $33,000. However, it is generally never quite this simple because of factors such as where the accident occurred, whether fault is an issue, and the debate of how serious the injury is including the need for future medical care and proof of future income loss.
Is fault an issue?
Many times in a rear-end car accident there is little or no issue of fault. However, for example in a failure to yield car crash there may be 2 different stories as to who was at fault, and liability or fault may not be as clear. This often lessens the value of the case, especially if an experienced car accident attorney is not involved to help prove your case.
If a case is worth $22,000 and the injured victim was 20% at fault, the settlement value is now only $17,600. Also, sometimes the driver who caused the accident was involved in outrageous or illegal behavior such as drunk driving or texting while driving which caused the accident. This may increase the value of the case.
Will there be future medical bills / lost wages because of the injury?
Under the law, expert testimony or evidence is required to prove future medical treatment. Perhaps it is likely that future surgery is required or a knee or hip replacement will be needed in the future due to the accident. A lawyer who is experienced in personal injury law will be able to put together a medical cost projection based on medical expert testimony. Also, the lawyer may hire a vocational expert to project future earnings losses based on several different situations, including: plaintiff will be required to retire earlier due to the injury, plaintiff will not be able to work the same amount of hours, or plaintiff has lost the opportunity for certain promotions, etc.
Location of the Accident
Insurance companies will place more value on an automobile accident case that occurs in Philadelphia or if the case can be brought in Philadelphia court as compared to a more “conservative” county. Thus, a case is generally valued more by an insurance company that can be filed in Philadelphia county as compared to Lancaster County. This is based on the theory that Philadelphia juries are more generous than some of the suburban juries. A case can generally be brought in Philadelphia for a car wreck if the accident happened in Philadelphia or the Defendant driver resides in Philadelphia. There may be circumstances that a lawsuit can be brought in Philadelphia, even if the accident happened outside of Philadelphia. This could include if the offending driver lived in Philadelphia or if a company who does most of its business in Philadelphia owned the vehicle that caused the accident.
Hire An Experienced Pain and Suffering Lawyer
Multiple studies have shown that people who hire a personal injury attorney recover more money than people who are not represented by lawyers even after attorney fees are deducted, making car accident lawyer costs worth it. In fact a 2004 Insurance Research Council study showed that injured victims recovered about 3 ½ times more when a lawyer represented them.
Edith Pearce, the founder of The Pearce Law Firm spent years working for an auto insurance company defending accidents. She eventually decided her heart was not in it, and she wanted to represent injured victims. She has the inside knowledge of how the insurance companies work and how to get the maximum settlement for a car accident case. She can argue why your injuries should be taken seriously by the insurance company. Give us a call for a free consultation. We can go over all your automobile insurance policy questions and help you. Call now, there is no obligation. You may also be interested in reading this article on Limited Tort vs Full Tort.
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