Understanding the Difference Between Economic and Non-Economic Damages

Were you recently injured in an accident in Orange County, CA, that wasn’t your fault? You may be able to seek financial compensation via an insurance claim or a personal injury lawsuit.

Compensation in personal injury cases is available for both economic and non-economic losses, also known as “damages” in legal terms.

Understanding the difference between economic and non-economic damages is essential to evaluating your claim properly and setting realistic expectations for your potential payout. When you know how much you can seek, you are less likely to accept low-ball settlement offers.

What Are Economic Damages?

Economic damages are measurable and have a clear dollar value. That is why they are also known as “specific” damages. In other words, economic damages are your actual financial losses related to your injuries, making them significantly easier to calculate than non-economic damages.

The purpose of awarding economic damages is to put you in the position you would have been in had the accident not occurred. For instance, if you were involved in a road accident, you typically have a right to seek reimbursement in the form of economic damages for the cost to repair or replace your car.

Economic Damages Examples

Common examples of economic damages include:

  • Past and future medical expenses
  • Past and future lost income
  • Loss of business or work opportunities
  • Value of services rendered
  • Cost to repair or replace damaged property
  • The cost of day-to-day living while injured 
  • Utility bills

Proving Economic Damages

Proving economic damages is relatively easy. You need to maintain a record of all your expenses related to the accident. Collect all medical bills, pharmacy receipts, car repair invoices, pay slips, and other documents that can serve as evidence of your past financial losses. 

Calculating future economic damages, such as the cost of your ongoing medical treatment or the loss of future business opportunities, can be more challenging. However, an experienced personal injury attorney will know how to estimate such losses. Your lawyer may also work with financial and medical experts to accurately estimate your injury-related expenses going forward.

Once your attorney has all your past and future financial losses, they will add them up to calculate the full value of your economic damages.

California’s Comparative Negligence Rule

Keep in mind, that your economic damages may be reduced if the other side can show that you contributed to your losses. California has a pure comparative negligence system. This means that if you are, say, 20% at fault for the accident, your final award will be reduced by your respective percentage of fault.

So, for example, let’s say you were injured in a traffic accident in which another driver ran a red light and crashed into your car. The other driver is clearly at fault. However, you also share some of the blame because you glanced at a text message on your phone when you should have been paying attention to the traffic at the intersection.

Later during the trial, the court finds that you were 20% at fault for the accident. Your total economic damages — medical bills, car repair costs, and so forth — are $100,000. Therefore, your award will be reduced accordingly, and you can only recover a maximum of $80,000.

The good news is that California has a pure comparative negligence system, which means you can recover some damages regardless of your percentage of fault. In states with a modified comparative negligence system, you can only seek compensation if you are less than 50% at fault.

What Are Non-Economic Damages?

As the name suggests, non-economic damages are non-financial losses. They are subjective, don’t have a clear monetary value, and can’t be easily calculated. Non-economic damages are also known as “general” damages (as opposed to the specific and easily quantifiable economic damages). That’s the main difference between economic and non-economic damages.

Because non-economic damages are subjective and largely depend on your emotions, perceptions, and state of mind, many jurisdictions have a cap on these settlements to ensure they aren’t unfairly excessive.

Under federal law, non-economic damages can’t be more than 10 times the amount of economic damages. California doesn’t have a cap on economic or non-economic damages in personal injury claims. The only exception is medical malpractice cases, which are subject to a $250,000 cap on non-economic damages.

Non-Economic Damages Examples

Examples of non-economic damages include:

  • Physical pain and suffering
  • Mental anguish
  • Emotional distress
  • Loss of enjoyment of life
  • Loss of companionship and intimacy
  • Loss of reputation
  • Physical impairment or disability

Proving Non-Economic Damages

You must work harder to prove non-economic damages. You would likely need to rely on witness testimony from family, friends, or co-workers to show that your quality of life has suffered due to the accident. Your personal injury lawyer may also commission reports from experts such as physicians or psychiatrists discussing the impact of the injuries on your day-to-day life and mental health.

Generally, it’s easier to argue non-economic damages if they have an accompanying physical manifestation. For example, the heightened emotional stress could cause you to develop a hard-to-treat skin infection.

While proving non-economic damages can be challenging, an experienced personal injury attorney will know how to build your case and argue all your losses — both monetary and non-monetary.

Punitive Damages

Economic and non-economic damages are collectively known as “compensatory” damages. Their goal is to compensate you for your losses and, to the extent that this is possible, put you in the position you would have been in had the accident not occurred.

There is another type of damages — punitive damages — that courts award in very rare cases involving particularly egregious or intentional behavior. The goal of these damages isn’t to compensate you but rather to punish the wrongdoer and deter them and others from engaging in similar behavior in the future.

Contact an Experienced Personal Injury Lawyer in Orange County, CA

Understanding the difference between economic and non-economic damages can be tricky. Our legal team at Khalil Law Group can review your case and explain what compensation you may be able to seek. Call (714) 617-7870 or contact us online to book your free consultation.

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