Types of Damages in a Personal Injury Case (Economic vs Non-Economic)

When you file a personal injury claim, the compensation you seek is referred to as damages. Understanding the different types of damages available in a personal injury case is essential to ensuring you receive full and fair compensation for your injuries. Many accident victims focus solely on their medical bills and lost wages, not realizing that they may be entitled to significantly more.

This guide explains the three main categories of damages in personal injury cases, how each is calculated, and what you can do to maximize your recovery.

The Three Categories of Damages

Personal injury damages fall into three broad categories: economic damages, non-economic damages, and punitive damages. Each serves a different purpose and is calculated differently.

Economic damages compensate you for your quantifiable financial losses. Non-economic damages compensate you for the subjective, non-financial impact of your injuries. Punitive damages are designed to punish the defendant for particularly egregious behavior and deter similar conduct in the future.

Most personal injury settlements include economic and non-economic damages. Punitive damages are only awarded in cases involving extreme negligence or intentional misconduct.

Economic Damages Explained

Economic damages, also known as special damages, are the tangible financial losses you have suffered as a result of your injury. These damages are relatively straightforward to calculate because they are based on actual dollar amounts supported by documentation.

Medical Expenses

Medical expenses are typically the largest component of economic damages. They include all costs related to treating your injuries, both past and future. Emergency room visits and ambulance transportation are included, as are hospital stays and surgical procedures. Diagnostic tests such as X-rays, MRIs, and CT scans are covered. Physical therapy and rehabilitation costs, chiropractic care, prescription medications, medical equipment such as crutches, braces, and wheelchairs, and home health care services are all part of your medical expense claim.

Future medical expenses are also recoverable if your injuries require ongoing treatment. To claim future medical expenses, you typically need a medical expert to testify about the expected cost and duration of future treatment.

Lost Wages

If your injuries prevented you from working, you can recover compensation for your lost income. This includes wages, salary, bonuses, commissions, and any other employment income you would have earned but for the accident. To document lost wages, you will need pay stubs showing your regular income, a letter from your employer confirming the time you missed from work, and tax returns if you are self-employed.

Lost Earning Capacity

If your injuries permanently affect your ability to work or force you to take a lower-paying job, you can claim lost earning capacity. This is different from lost wages because it compensates you for future income you will never earn rather than income you have already lost.

Calculating lost earning capacity often requires expert testimony from a vocational rehabilitation specialist or economist who can assess how your injuries affect your ability to work and earn income over the remainder of your career.

Property Damage

If your personal property was damaged in the accident, you can recover the cost of repair or replacement. In car accident cases, this includes vehicle repair costs, the fair market value of your vehicle if it was totaled, rental car expenses while your vehicle is being repaired, and the cost of replacing personal items damaged in the accident such as electronics, clothing, and eyeglasses.

Out-of-Pocket Expenses

Various out-of-pocket expenses related to your injury are also recoverable. These include transportation costs to and from medical appointments, costs of hiring help for household tasks you can no longer perform, costs of modifying your home or vehicle to accommodate a disability, and any other reasonable expenses directly related to your injury.

Non-Economic Damages Explained

Non-economic damages, also known as general damages, compensate you for the intangible, non-financial impact of your injuries. These damages are more difficult to quantify because they do not have a specific dollar amount attached to them.

Pain and Suffering

Pain and suffering is the most common type of non-economic damage. It compensates you for the physical pain and discomfort caused by your injuries, both during the initial injury and throughout your recovery. The amount of pain and suffering damages depends on the severity of your injuries, the duration of your pain, whether the pain is temporary or permanent, and the type and extent of medical treatment required.

Insurance companies typically calculate pain and suffering using the multiplier method, which multiplies your economic damages by a factor of 1.5 to 5 depending on injury severity.

Emotional Distress

Emotional distress damages compensate you for the psychological impact of your injuries. This can include anxiety and panic attacks, depression, post-traumatic stress disorder, insomnia and sleep disturbances, fear and phobias related to the accident, and mood changes and irritability.

To support a claim for emotional distress, it is helpful to have documentation from a mental health professional such as a psychologist or psychiatrist who has diagnosed and treated your condition.

Loss of Enjoyment of Life

If your injuries prevent you from participating in activities and hobbies you enjoyed before the accident, you can claim loss of enjoyment of life damages. This might include the inability to play sports or exercise, difficulty traveling or going on vacation, inability to play with your children or grandchildren, loss of sexual function or intimacy, and inability to pursue hobbies such as gardening, cooking, or playing music.

Loss of Consortium

Loss of consortium is a claim made by the spouse or family members of the injured person. It compensates them for the loss of companionship, affection, sexual relations, and support that resulted from the injury. In some states, loss of consortium claims can also be made by parents of injured children or children of injured parents.

Disfigurement and Scarring

If your injuries resulted in permanent scarring or disfigurement, you can claim additional non-economic damages. The amount depends on the location and visibility of the scarring, the extent of the disfigurement, your age and gender, and the psychological impact of the disfigurement.

Facial scarring and scarring on visible areas of the body typically command higher damages than scarring in areas normally covered by clothing.

Punitive Damages

Punitive damages are different from economic and non-economic damages because they are not intended to compensate the victim. Instead, they are designed to punish the defendant for particularly egregious behavior and deter others from engaging in similar conduct.

Punitive damages are only awarded in cases involving extreme negligence, reckless disregard for safety, intentional misconduct, or fraud. Examples of cases where punitive damages may be awarded include drunk driving accidents where the defendant had a very high blood alcohol level, cases where a company knowingly sold a dangerous product, medical malpractice involving intentional concealment of errors, and cases involving assault or intentional harm.

Not all states allow punitive damages, and many states that do allow them impose caps on the amount that can be awarded. For example, some states limit punitive damages to a multiple of the compensatory damages, such as three or four times the economic and non-economic damages combined.

How Damages Are Calculated

The Multiplier Method

The most common method for calculating total damages is the multiplier method. First, you add up all economic damages including medical bills, lost wages, and property damage. Then you multiply the economic damages by a factor of 1.5 to 5 to estimate non-economic damages. Finally, you add the economic and non-economic damages together to get the total claim value.

The multiplier used depends on the severity of your injuries. Minor injuries with full recovery typically use a multiplier of 1.5 to 2. Moderate injuries requiring extended treatment use a multiplier of 2 to 3. Serious injuries with long-term effects use a multiplier of 3 to 5. Catastrophic injuries with permanent disability may use a multiplier of 5 or higher.

The Per Diem Method

The per diem method assigns a daily dollar amount for each day you experience pain and suffering. The daily rate is often based on your daily earnings. You multiply the daily rate by the number of days from the accident until you reach maximum medical improvement.

Computer Software Programs

Many insurance companies use proprietary software programs such as Colossus to calculate settlement values. These programs input various data points about your injuries, treatment, and recovery to generate a settlement range. Understanding that insurance companies use these tools can help you anticipate their offers and prepare effective counterarguments.

Maximizing Your Damages Recovery

Document Everything Thoroughly

The key to maximizing your damages is thorough documentation. Keep copies of all medical records and bills, maintain a daily pain journal, save all receipts for out-of-pocket expenses, document your emotional state and how the injury affects your daily life, and take photographs of your injuries at various stages of recovery.

Follow Your Treatment Plan

Consistently following your doctor's treatment plan demonstrates the seriousness of your injuries and supports your claim for damages. Gaps in treatment give insurance companies ammunition to argue that your injuries are not as severe as you claim.

Do Not Undervalue Non-Economic Damages

Many accident victims focus on their medical bills and lost wages while undervaluing their pain and suffering and other non-economic damages. In many cases, non-economic damages are worth more than economic damages. Make sure you account for all categories of non-economic damages when calculating your claim value.

Consider Future Damages

Do not settle your claim until you understand the full extent of your injuries, including any future medical treatment you may need and any permanent limitations on your ability to work. Settling too early can result in leaving significant compensation on the table.

Use a Settlement Calculator

Our free settlement calculator can help you estimate the total value of your claim including both economic and non-economic damages. Simply enter your medical expenses, lost wages, and injury details to receive an instant estimate based on the multiplier method.

Damages Caps by State

Some states impose caps on certain types of damages, particularly non-economic damages and punitive damages. These caps can significantly affect the value of your claim.

States with non-economic damage caps include Colorado, Idaho, Maryland, Mississippi, Missouri, Ohio, Oklahoma, Oregon, Tennessee, and Texas, among others. The specific cap amounts vary by state and may be adjusted periodically for inflation.

Medical malpractice cases are subject to separate damage caps in many states. These caps may apply to non-economic damages only or to total damages including both economic and non-economic components.

It is important to check the damage caps in your state, as they can significantly affect the maximum recovery available in your case.

Conclusion

Understanding the different types of damages available in a personal injury case is essential to ensuring you receive full and fair compensation. Economic damages cover your financial losses, non-economic damages compensate for the intangible impact on your life, and punitive damages may be available in cases involving extreme misconduct.

The key to maximizing your recovery is thorough documentation, consistent medical treatment, and a clear understanding of all the categories of damages you are entitled to claim. Do not undervalue your non-economic damages, and make sure you account for future expenses and limitations.

Use our free settlement calculator to get an estimate of what your case might be worth, including both economic and non-economic damages.