What are non-economic damages and how are they calculated?

Understanding Non-Economic Damages

Under Missouri law, personal injury plaintiffs have the right to collect two types of damages. Economic damages involve your tangible, financial losses, such as medical care or lost wages. These losses are fairly straightforward to prove; you can usually establish your right to economic damages using receipts, bills, invoices, medical records, paystubs, and other important documents.

Non-economic damages, on the other hand, refer to the physical and emotional pain and suffering that you endured. They cannot be quantified using financial records, but this level of trauma can still have a major impact on your life. Examples of non-economic losses include the following.

Chronic pain

Permanent disability

Depression and anxiety

Post-traumatic stress disorder

Mental anguish

Emotional distress

Loss of quality of life

Permanent disfigurement

How to Calculate Non-Economic Damages

To calculate the non-economic portion of your personal injury settlement, insurance companies often use their own formulas. Your attorney will likely leverage one of the more common methods to estimate your potential award. In many cases, one of two formulas will be used: the per-diem formula, or the multiplier method.

The Per-Diem Formula

Under the per-diem formula, you will be assigned a dollar value based on your average daily earnings at your job. You will receive this rate for every day that your injury causes pain and suffering, preventing you from returning to your job.

For example, say that you are injured in a car accident and suffer a broken hip. You are unable to work for 100 days while recovering from the collision. You make an annual salary of $40,000 at your current job.

Your daily rate will be $160 for the 250 working days per year. Because you are unable to work for 100 days due to your injuries, the pain and suffering portion of your award will be $16,000.

The Multiplier Method

The second method for calculating non-economic damages is known as the multiplier method. The insurance company will assign you a number or a multiplier based on the severity of your injuries, usually between one and five. The more serious your injuries, the higher the multiplier will be.

Then, the company will multiply the total value of your economic damages by your multiplier to calculate your non-economic losses. For example, say that you sustain a brain injury and receive a multiplier of 4. You experience $100,000 in economic losses. As a result, your pain and suffering award will be $400,000.

Have You Been Injured in Kansas City, Missouri? You Should Speak With an Experienced Kansas City Personal Injury Lawyer

If you've been injured in the Kansas City area you should speak with an experienced personal injury lawyer as soon as possible. Please feel free to contact us online or call our office directly at 816.832.4688 to schedule your free consultation. We are proud to serve Kansas City, Missouri and the surrounding area and look forward to speaking with you.