When someone is injured in an accident, the financial and emotional toll can be staggering. That’s where damages come in. They are the manner in which the law attempts to set things right. However, not all damages are the same. In personal injury cases, two general types of damages arise quite often. Those types of damages are economic and non-economic damages.
Economic damages can be determined using math to find the loss per ascertainable unit. They are the bills, receipts, and pay stubs that demonstrate the exact amount of loss an injury causes to that person. Non-economic damages, however, deal with personal loss, which is more subjective and cannot be quantified simply in dollars these days.
Understanding non-economic damages is very important since they generally represent a large portion of the settlement or court award. They speak to the emotional, mental, and social side of the injury to the person.
What Are Economic Damages?
Economic damages are the measurable financial losses sustained as a result of injury. They are referred to as “special damages” since they are made within the confines of substantive methodology. These damages are backed up by proof such as medical bills and financial records.
Common examples of economic damages are:
- Medical bills: Hospital bills, surgeries, physical therapy, medication, etc.
- Lost wages: The salary that could not be earned during the period of recovery.
- Property Damage: Repairs or replacement of the vehicle after an accident.
- Future Expenses: Long-term medical treatment, or loss of ability to earn a living.
For example, if you have a broken leg due to an automobile collision and cannot work for three months, your lost wages and medical expenses are considered economic losses. They are tangible and easily susceptible to verification.
What are Non-Economic Damages?
Non-economic damages are the effects that your injury has had on your lifestyle. They are occasionally referred to as “general damages” because they do not have a line item dollar value.
They will cover such things as:
- Pain and suffering
- Emotional distress
- Loss of enjoyment of life
- Loss of companionship or consortium.
Assume that two individuals are in the same accident. One loses one month’s wages and fully recovers. The other person results in certain permanent pain, which makes it impossible for him to play with his kids. The continued suffering of the second person would fall under the category of non-economic damage, because it would affect his lifestyle in a manner that could not be measured in terms of money.
How Do Courts and Insurance Companies Evaluate Value?
Both the courts and the insurance adjusters utilize different methods of evaluating non-economic damages. One of the more commonly used methods is called the multiplier method, whereby the economic damages are multiplied by a number, usually between 1.5 and 5, depending upon the seriousness of the injury.
If your medical expenses plus lost wages equal $20,000 and your injury is severe, the multiplier would be 3, and your non-economic damages would be equal to about $60,000.
Key Points to Remember
- Economic damages are measurable monetary losses (bills, wages, repairs).
- Non-economic damages are emotional and physical suffering, with no fixed dollar loss.
- Both types work together to bring about fair compensation.
- The more severe or the more lingering the injury, the greater the non-economic damages.
- It is necessary that both types be documented, and legal support is required to prove both types.
Learning and understanding the difference in these two types of damages will help you see the total picture of what your case is worth, not only in monetary value, but in the value it has had on the quality of your life.