In personal injury cases, damages are the monetary compensation awarded to the injured party. These damages fall into two main categories: economic and non-economic. Understanding the difference between them is essential for calculating a fair settlement or judgment.
What Are Economic Damages?
Economic damages are financial losses that can be clearly documented and calculated. They represent the out-of-pocket expenses resulting from the injury.
Common examples of economic damages include:
- Medical expenses: hospital bills, prescriptions, surgeries, rehabilitation, and ongoing treatment
- Lost income: wages missed due to recovery time or the inability to return to work
- Property damage: vehicle repairs or replacement after an accident
- Future medical care: long-term treatment or therapies needed due to permanent injuries
- Loss of earning capacity: reduced ability to work and earn income in the future
Economic damages are supported by bills, receipts, pay stubs, and expert evaluations. The goal is to reimburse the injured party for actual, measurable losses.
What Are Non-Economic Damages?
Non-economic damages are more subjective. They refer to losses that don’t have a fixed price tag but still significantly impact a person’s life and well-being.
Common types of non-economic damages include:
- Pain and suffering: physical pain caused by the injury and recovery process
- Emotional distress: anxiety, depression, PTSD, and other mental health issues
- Loss of enjoyment of life: inability to participate in hobbies, exercise, or social activities
- Loss of consortium: strain on relationships with a spouse or family due to the injury
- Scarring or disfigurement: long-term physical changes that impact confidence or social interaction
Since these damages cannot be proven with invoices or receipts, personal testimony, medical records, mental health evaluations, and expert witnesses help establish their value.
How Are These Damages Calculated?
Economic damages are calculated by totaling all relevant expenses and projected future losses. This includes documented costs already incurred and estimates based on future treatment plans or income potential.
Non-economic damages are calculated using two main methods:
1. Multiplier Method
This approach multiplies the total economic damages by a number between 1.5 and 5 based on injury severity. For example, if economic damages are $50,000 and the multiplier is 3, the non-economic damages would be $150,000.
2. Per Diem Method
A daily dollar value is assigned to the pain and suffering experienced, then multiplied by the number of days the person is affected. For example, $250 per day over 200 days equals $50,000.
Why Both Types of Damages Matter
While economic damages reimburse you for the financial impact of an injury, non-economic damages account for the quality of life you’ve lost. Serious injuries affect more than just your bank account, they can limit your independence, emotional well-being, and relationships.
An experienced personal injury lawyer will ensure both types are fully evaluated and included in your claim. Many insurance companies try to focus only on economic damages, underestimating or ignoring the non-economic component.
Real-World Example
A car accident victim with $40,000 in medical bills and lost wages also suffers from chronic back pain, cannot play with their children, and experiences anxiety every time they drive. While the $40,000 is easy to prove, the emotional trauma and physical suffering might be worth two to three times that amount. Ignoring non-economic damages would leave the victim undercompensated.
Mistakes That Affect Damage Recovery
- Not keeping records of medical visits, receipts, or time missed from work
- Delaying medical treatment, which may weaken the link between the accident and injuries
- Failing to document emotional or mental health issues with a licensed provider
- Accepting a quick settlement offer without understanding the full extent of the damage
These errors can dramatically reduce your recovery. Always consult a lawyer before signing anything from the insurance company.
Access Additional Guidance
The legal resources provided by Avian Law Group explain in more detail how damages are determined and what evidence strengthens a claim. They also provide information on legal timelines, settlement strategies, and case preparation.
Frequently Asked Questions
Can I recover both economic and non-economic damages?
Yes. Most personal injury cases involve both. You can be compensated for financial losses as well as pain, suffering, and emotional trauma.
Are non-economic damages capped?
Some states place a cap on non-economic damages, especially in medical malpractice cases. However, these limits vary and may not apply to all personal injury claims. A lawyer can explain your state’s rules.
How do I prove non-economic damages?
You can support your claim with:
- Medical and mental health records
- A pain journal or diary
- Testimony from family, friends, and coworkers
- Expert opinions on how the injury impacts your life
Final Thought
Economic and non-economic damages together represent the full scope of harm a person endures after an injury. While the financial losses may be easier to prove, the emotional and physical toll is equally important. Working with a knowledgeable personal injury lawyer ensures that both forms of damage are accounted for and that your compensation reflects the true extent of your suffering.
Michael Avanesian, the founder and driving force behind Avian Law Group, is a passionate and dedicated attorney with a strong background in personal injury law. As a partner at JT Legal Group, Michael led the growth of the personal injury practice from a single employee to a team of over ninety professionals, securing over $2 billion in settlements for clients in just three years.
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