Non-economic damages are important in personal injury cases as they compensate victims for intangible losses. This type of damage includes
- Emotional distress
- Pain and suffering
- Loss of enjoyment of life
Non-economic damages are harder to figure out than economic damages because they need to be valued in a certain way. In a personal injury (PI) case, there are two main ways to calculate non-economic damages:
- The per-diem method
- The multiplier method
Experienced personal injury lawyers often use these two ways to calculate how much money their clients deserve as a settlement. The right approach depends on the type and severity of the injuries, as well as the unique circumstances of the case.
We will explain each of these methods in easy terms below.
The Per-Diem Method
The per diem method calculates non-economic losses based on a daily value given to the victim’s pain and suffering. In most cases, this amount is equal to the person’s daily wage or a fair amount based on how bad their injuries are.
- The daily rate is multiplied by the number of days the injury causes the victim pain, suffering, or emotional distress.
- This method gives bigger awards for serious injuries that take longer to heal from.
Take the case of someone who makes $200 a day and can’t work for 150 days because of a major back injury. Using the per diem method, their non-economic losses for pain and suffering would be $200 times 150 days, which comes to $30,000. The most important part of this method is figuring out an appropriate daily value that shows how bad the injury is.
The Multiplier Method
Another popular method to calculate non-economic damages is the multiplier method. With this method, the total economic losses are multiplied by a number that is usually between 1.5 and 5. The multiplier used is based on how bad the pain is and how long it lasts.
- A multiplier of 1.5 to 2 may be appropriate for minor injuries, while a multiplier closer to 5 may be appropriate for serious or long-term injuries.
- To get an idea of the non-economic damages, you multiply the total economic damages by the number of hospital bills and lost wages.
For example, let’s say someone has a traumatic brain injury and has to pay $20,000 for hospital bills and other costs. The multiplier could be set at 4 because of how bad the hurt is. The non-economic losses would add up to $80,000 if you multiply $20,000 by 4. This method looks at both how much the injury costs and how it changes the person’s life in general.
What’s Different Between the Two Methods
Both methods try to put a value on non-economic damages, but they do so in different ways:
- The per diem method assigns a daily amount for pain and suffering, which works better for injuries with clear recovery times.
- On the other hand, the multiplier method connects non-economic damages to economic losses, which is best for injuries with long or uncertain recovery times.
Both methods can be used to figure out what the fair compensation should be, but the one that is chosen depends on the details of the case and the evidence that is presented.
Thank you for reading.
