When someone is injured in an accident, the law provides a way to seek compensation for the harm they have suffered. That compensation usually falls into two main categories: economic and non-economic damages.
For plaintiffs, understanding these categories can help set realistic expectations for settlement negotiations and trial. For defendants, it shapes defense strategy and case evaluation. Either way, damages are the heart of a personal injury claim, and a clear understanding of them ensures both sides know what is at stake.
At Compass Law Group, LLP, we’ve helped clients build a strong case and earn the compensation they deserve after a serious incident. We’ll go over the basics of economic vs. non-economic damages, how they play into your settlement, and how to prove both when filing your claim.
What Are Economic Damages?
Economic damages are the tangible financial losses that result from an injury. These damages are objective, measurable, and can usually be proven with bills, receipts, pay stubs, or other documentation.
Courts and insurance companies often view economic damages as the “easiest” category of losses to calculate because the numbers are grounded in evidence.
Examples of economic damages include:
- Medical Expenses: Hospital bills, surgery costs, prescription medications, ongoing treatments, and even future medical care.
- Lost Wages: Income lost during recovery, as well as reduced future earning capacity if the injury impacts career prospects.
- Property Damage: Costs to repair or replace damaged car, phone, or other personal property.
- Rehabilitation and Therapy Costs: Physical therapy, occupational therapy, and vocational retraining.
How Courts Calculate Economic Damages
Courts use an evidence-based approach to determine economic damages. The process includes:
- Reviewing Records: This includes documents such as medical bills, invoices, pay stubs, tax returns, and receipts.
- Relying on Experts: Doctors may testify about the cost of ongoing care, while economists can project lost income based on age, career, and inflation trends.
- Considering Future Losses: Calculations may include expected medical treatments, long-term care, and reduced earning potential.
- Adjusting for Present Value: Future losses are often discounted to reflect their present-day value, ensuring the award is fair but not inflated.
This objectivity is why economic damages are often considered the “foundation” of a personal injury case. Without them, it can be challenging to build a strong claim.
What Are Non-Economic Damages?
While economic damages compensate for measurable financial losses, non-economic damages cover the intangible harm caused by an injury. These damages are not about bills or receipts, but rather the personal, human impact an accident leaves behind.
Non-economic damages recognize that injuries change more than just bank accounts. They can affect mental health, relationships, and overall quality of life. Because these harms are subjective, they are much harder to calculate and prove in court.
Examples of non-economic damages include:
- Pain and Suffering: Physical discomfort, ongoing pain, or chronic conditions that reduce quality of life.
- Emotional Distress: Anxiety, depression, PTSD, or other mental health effects tied to the accident.
- Loss of Enjoyment of Life: Inability to participate in hobbies, activities, or everyday pleasures once taken for granted.
- Loss of Consortium/Companionship: Strain on family relationships, particularly the loss of intimacy and support in marriages or close partnerships.
How Courts Assess Non-Economic Damages
Because non-economic damages are subjective, courts rely on jury discretion and sometimes statutory guidelines to decide what is fair. Two common methods that are often used include:
- The Multiplier Method: The jury multiplies the total economic damages by a certain number (commonly between 1.5 and 5, depending on severity). For example, if medical bills are $100,000 and the multiplier is 3, the non-economic damages could be $300,000.
- The Per Diem Method: A daily rate is assigned to the plaintiff’s suffering, and that rate is multiplied by the number of days the plaintiff is expected to endure the injury.
Certain factors can also impact the value of your non-economic damages, such as:
- The severity of the injuries
- Whether the injuries are permanent or temporary
- How the injuries impact the plaintiff’s daily life and independence
- The plaintiff’s credibility and supporting testimony from family, friends, or medical experts
Because of this, two people with similar injuries may receive very different non-economic awards depending on how their cases are presented and the jurisdiction’s rules.
Differences Between Economic vs. Non-Economic Damages
The main difference between economic and non-economic damages is that one is based on clear numbers, while the other is based on personal experiences and feelings.
Here’s a brief comparison on how the two categories differ:
Type of Loss
- Economic: Financial, measurable
- Non-Economic: Intangible, personal
Proof Required
- Economic: Bills, receipts, pay stubs, expert reports
- Non-Economic: Testimony, personal accounts, expert evaluation
Predictability
- Economic: More predictable, grounded in documentation
- Non-Economic: Less predictable, varies by jury and case
Examples
- Economic: Medical bills, lost wages, property damage
- Non-Economic: Pain and suffering, emotional distress, loss of enjoyment
Why the Distinction Matters in Personal Injury Cases
Insurance companies tend to accept economic damages more easily because they are supported by evidence. Non-economic damages, however, are often disputed. Insurers may argue that the pain and suffering is exaggerated or unrelated to the accident.
Plaintiffs’ attorneys must also balance presenting hard evidence for economic losses with compelling stories and witness testimony for non-economic damages. Defendants may focus their efforts on challenging credibility and minimizing subjective claims.
Legal Limits on Caps and Damages
In some states, laws place caps on non-economic damages to limit the amount plaintiffs can recover. These caps are most common in medical malpractice cases, though some jurisdictions extend them to other personal injury claims.
California capped non-economic damages in medical malpractice cases at $250,000 with the MICRA law. Recent reforms have gradually raised this cap, but it still restricts recovery compared to economic damages, which remain uncapped.
On one hand, lawmakers argue that caps prevent runaway jury verdicts, stabilize insurance costs, and promote predictability. On the other hand, critics argue they unfairly limit compensation for victims who suffer life-altering, intangible losses.
Proving Economic vs. Non-Economic Damages in Court
A common mistake plaintiffs make is focusing too heavily on economic damages while under-developing the narrative for non-economic damages. The most successful cases combine solid documentation with compelling storytelling, making the impact of the injury both measurable and relatable.
Successfully recovering damages in court requires strong, strategic evidence tailored to each type.
For Economic Damages:
- Present receipts, invoices, medical records, and wage statements.
- Use expert witnesses like economists to calculate future losses.
- Avoid inconsistencies, as small errors in paperwork can undermine credibility.
For Non-Economic Damages:
- Rely on the plaintiff’s personal story and testimony from family, friends, and therapists.
- Use journals, photos, or videos that show lifestyle changes after the accident.
- Avoid exaggeration, since juries tend to punish plaintiffs who overstate their suffering.
Navigating Economic vs. Non-Economic Damages with Confidence
The distinction between economic vs. non-economic damages is one of the most important aspects of personal injury law. Economic damages provide a measurable foundation for recovery, while non-economic damages capture the deeper personal toll of an accident.
At Compass Law Group, LLP, we understand how overwhelming the legal process can feel after an injury. Our team combines compassion with cutting-edge legal strategies, so you earn the compensation you deserve. Because we work on a contingency fee basis, you won’t pay unless we win.
If you’ve been injured and want clarity on what your claim may be worth, reach out to us today for a free consultation. We’ll fight for your rights and guide you every step of the way.
Frequently Asked Questions
What is the difference between economic and non-economic damages?
Economic damages cover financial losses like medical bills, lost income, and property repair costs. Non-economic damages compensate for intangible harm such as pain and suffering, emotional distress, and loss of enjoyment of life.
Are non-economic damages harder to prove?
Yes. Unlike economic damages that can be supported with bills or pay stubs, non-economic damages rely on testimony, personal accounts, and expert opinions. Juries can have varying discretion in determining non-economic damages.
Can both types of damages be awarded in the same case?
Absolutely. Most personal injury cases involve a combination of both. For example, a plaintiff may recover lost wages and medical bills as economic damages, alongside pain and suffering as non-economic damages.
What if my state has damage caps?
Damage caps, especially for non-economic damages, can limit how much you recover. California applies caps in medical malpractice cases, but not for other personal injury instances, such as a car accident. Always check state-specific laws.
How can an attorney help maximize my compensation?
An experienced attorney can gather the proper evidence, bring in credible expert witnesses, and craft a compelling narrative that highlights both financial and personal losses. This balanced approach often leads to more substantial settlements or better trial outcomes.
