Non-Economic Benefits: What Are They, and How Do You Calculate Their Value?

Being injured in an accident isn’t on anyone’s daily schedule. However, a lot can happen in life that you don’t expect, including being in an accident. If the unthinkable happens, you’re probably facing mounting bills like medical expenses and property repair costs.

However, what about other damages like pain and suffering? Your medical costs are relatively easy to figure out but how do you determine the value of damages that don’t come with bills? In this article, you’ll have your pain and suffering damages explained. We’ll also take a closer look at other non-economic damages commonly listed in personal injury claims.

What Are Non-Economic Damages

Accidents typically result in a variety of damages. If you sustain injuries, you’re probably looking at medical expenses.

Property damage is also common, especially in auto accidents. Your injuries may even be severe enough to prevent you from returning to work. You can list lost income as damage on your insurance claim. These are considered economic damages. You have bills and receipts showing their value. However, it’s a little different when you’re dealing with non-economic damages.

So, what are non-economic damages? These are intangible damages, meaning they don’t come with a handy price tag. Non-economic damages address the emotional trauma accident victims often feel. Some examples of non-economic damages include:

- Pain and suffering
- Mental anguish
- Loss of life enjoyment
- Emotional distress
- Loss of quality of life
- PTSD (post-traumatic stress disorder)

If your injuries result in permanent disfigurement, this can also be included as non-economic damage. In a nutshell, non-economic damages address the psychological trauma you experience as an accident victim.

How to Calculate Non-Economic Damages

Since non-economic damages don’t come with bills and receipts, calculating the value can be tricky. After all, how do you place a dollar amount on your mental anguish? While you can’t put a price on pain and anguish, you can estimate its value using one of two methods.

Per Diem Method

The per diem method looks at your average daily earnings and the number of days your injuries cause you pain. Your average daily wage is multiplied by how many days you feel pain.

For example, if your annual salary is $40,000 and the pain from your injuries lasts for 100 days, your average daily wage is $160. You divide your annual salary by the number of days you didn’t experience pain, in this case, the number is 250.

Your formula for calculating your non-economic damages is $160 x 100 = $16,000. So, your injury claim will list non-economic damages totaling $16,000.

Multiplier Method

The multiplier method is often preferred by insurance companies. The reason is pretty simple. Non-economic damage totals are often lower using the multiplier method. However, this depends on your annual salary.

If your annual salary falls into a higher earning bracket, the per diem method may not be your best option. Remember, insurance companies prefer settling claims for the lowest possible value. So, if your annual salary equals 6 figures and higher, your non-economic damages may total more than the insurance company is willing to pay out. This is when the multiplier method may be the best option for calculating your non-economic damages.

The multiplier method assigns your pain a number, typically 1 to 5. The higher the number, the greater your pain and anguish. Who assigns the number? The insurance company usually takes care of this step. You’re also going to need to know the total of your economic damages.

An example of a formula using the multiplier method with economic damages totaling $50,000 and a pain level of 2 means your non-economic damages are $100,000.

To help keep negotiations with the insurance company going smoothly, it’s a good idea to use both methods to calculate your non-economic damages. So, this way, if the insurance adjuster rejects one total, you’re ready with a counteroffer. Sometimes, simply indicating you’re willing to work with the insurance adjuster is enough to move the claim process along.

Filing an Accident Claim with Non-Economic Damages

Most personal injury claims include non-economic damages and the steps you should take after an accident are pretty straightforward.

Report the Accident

State laws vary when it comes to reporting an accident. All require you to report any accident involving injuries or fatalities. However, you may not be legally required to report an accident if property damage is minimal and no one suffers an injury.

While it may be perfectly legal to skip alerting the authorities, it’s not a good idea. To file an insurance claim for your damages, you need to submit your official accident report. The report serves as proof that the accident resulting in your damages occurred.

Seek Medical Attention

Even if you don’t believe you sustained any injuries, you should still make an appointment with a healthcare professional.

Some injuries take a few days to start showing symptoms. Along with being proactive about your health, you also need your medical records if your damages include pain and suffering due to your injuries.

Document the Accident Scene

If your injuries are too severe or the accident has left you too shaken up to document the scene, don’t worry. Your accident report will include all relevant details.

However, if possible, try to document the accident scene since this can help speed up the claim process. Your accident report takes about 10 business days before it’s ready for pick-up. If you take steps to document the accident scene, you can get started on filing a claim even if you’re waiting for the report.

Any evidence you collect can also help support your accident claim. So, what evidence should you collect? Take photos of any property damage and visible injuries. Get contact info from witnesses, but don’t discuss the accident. Anything you say can be used by the insurance company to devalue your claim.

Consult with an Attorney About Your Non-Economic Damages

Seeking legal representation before you file a claim with the insurance company can often prove to be the smartest possible move to make. Your attorney can help determine your non-economic damages using both methods.

If the insurance company won't settle, your attorney will file your claim in civil court. With an attorney making sure that all paperwork is properly done and submitted on time, you stand a much better chance of receiving fair compensation.