How Does Insurance Company Come Up With Value For Pain And Suffering?

An insurance company must offer any claimant a fair compensation. Otherwise, the same claimant might decide to sue the insurance company for bad faith.

Insurance companies pick one of 3 different methods for placing a value on a claimant’s pain and suffering

Traditional methods

Some companies use the multiplier method. That entails picking a number between 1.5 and 5, with the lower number linked to a minor injury and the larger one to a serious or catastrophic injury. That number should then be on factor in a multiplication operation.

The other factor would be the sum for all of the medical expenses. If those expenses had resulted from a catastrophic injury, then the multiplier might be 6 or 7. In either case, the product of the multiplication would yield the value for the pain and suffering.

Some companies use the per diem method. That entails choosing an amount of money that could represent the monetary costs for the claimant’s daily trials. Was money spent on special equipment, or changes in the home? If so, then that cost would be considered in selection of the per diem value.

The per diem value would then be multiplied by the number of days that the victim/claimant had to spend in recovery from the injury. The result of that calculation would yield the value for the pain and suffering.

A newer method

Companies that use this newer method do not perform any calculations. Instead, they feed the known numbers, those for the medical expenses into a computer program. The same program could be fed information on the type of doctor seen by the patient/claimant as per Injury Lawyer in Kitchener.

In addition, it could be fed information on any way that the injury’s effects might have disrupted the claimant’s lifestyle. The computer’s software would use all the entered information to arrive at a value for the pain and suffering.

Insurance companies like the way that the software takes into account the type of treatment given to the patient. In the past, insurance companies have tried to consider the source of the treatment, while summing up all of the medical expenses. They did that by reducing the size of any bill that had come from a chiropractor, or a practitioner of an untraditional type of medicine, such as acupuncture.

None of the methods used now and, in the past, have incorporated the charges for a diagnostic workup. Insurance companies do not like to offer compensation for diagnostic procedures. Insurance companies have shown a reluctance to compensate claimants that have not sustained a readily apparent injury, such as a broken leg.

Not all injuries show up on an x-ray. Some traumatic brain injuries could get overlooked, without a proper diagnosis.