Accidents happen every day for many reasons and under many different circumstances, often leaving people with unexpected injuries, property damage, and other losses. Depending on the circumstances, these losses may include what are called economic and non-economic damages—from medical bills and lost income to ongoing medical treatment, physical pain, emotional distress, and diminished quality of life.
Understanding the difference between economic and non-economic damages will help you better understand your legal rights and the compensation you may be entitled to pursue.
Although both categories address losses resulting from an injury, they cover very different types of harm.
Why Understanding Your Injuries Matters
Imagine that you are stopped at a traffic light, waiting patiently, when someone behind you hits your car because they weren’t as patient as you were. The crash of metal and the jolt to your body make it immediately clear that something is wrong. Yes, your car is damaged, and you’re probably also dealing with one or more physical injuries. But the consequences of the accident may extend well beyond what you can see or feel in those first few moments.
For example, someone else’s negligence can cause personal injury, property damage, and overwhelming stress and trauma. This can lead to medical costs, including bills, missed work, and ongoing treatment. Other expenses often arise as the situation progresses, adding to the financial burden and stress.
This is where economic and non-economic damages come into play.
Economic Damages — Defined
Economic damages are the financial consequences of an accident that affect the victim now and in the future. You have every right to heal and to restore your life to a level comparable to how it was before the accident, which is why seeking economic damages is so important. They are “objectively verifiable monetary losses” such as:
Past and future medical expenses — You will be treated initially, and treatments may be ongoing, including physical therapy, surgery, and ongoing care.
Loss of past and future earnings — If you are injured and not cleared to return to work for a period of time, you could lose wages or even your job. How will you move forward to support your family and restore your career? Will this injury affect your ability to get another job if you lose yours? These are questions to consider.
Loss of use of property and the cost of repair or replacement — If your car or other personal property is damaged, it may be out of use while it’s being repaired or replaced. Is a rental car needed? Is the amount the insurance company is offering to replace the car enough to get an adequate replacement? Sometimes initial insurance settlement offers seem adequate, but as you heal and return to “normal life,” do you have ongoing physical or occupational therapy or other expenses that were not considered in the initial settlement amount?
The economic value of domestic services and lost wages — If a parent is injured and is a stay-at-home mom or dad, many things that person does will now have to be paid for by outside help. This parent often drives kids to activities, cooks, shops, cleans, and does a variety of household tasks that can be compromised if they are injured. Do you now need a nanny, a cook, or cleaning services? These are all considerations if someone in a household is injured in an accident. If the main “breadwinner” is injured, how will that affect the family budget?
Non-Economic Damages — Defined
Unlike economic damages and the financial concerns they raise, non-economic damages go beyond finances and can affect a person’s independence, well-being, and quality of life. If your life after an accident cannot compare to the life you had before, that affects your quality of life and should be addressed.
Common examples of non-economic damages can include:
Pain and Suffering — An accident can cause chronic pain and discomfort. Accidents due to vehicle collisions, falls, or other negligent acts can also cause long-term distress mentally and physically. Do you now have persistent pain that you didn’t have before the accident? Is it straining your everyday life? Is the pain preventing you from functioning at a normal level?
Emotional Distress and Loss of Enjoyment of Life — After an accident, you can suffer PTSD and anxiety relating to the incident. This can impair daily functioning and reduce enjoyment of regular activities and recreation with family and friends. For instance, riding in a car may now cause great anxiety, and this is an everyday activity that most people do on a regular basis.
Physical Impairment — This applies if an injury results in a permanent impairment or limits independence and daily activities, like lifting things, walking, climbing stairs, or any other regular activity you were able to do before the accident. A physical impairment can seriously limit a person’s independence. This limitation can also create a need for a home aide to help with activities of daily living.
Disfigurement, Scarring, or any other Physical Disability — Physical changes and impairments that affect appearance and ability can seriously impact a person’s confidence and emotions. Whereas there can be an economic cost for medical treatment for such things, the mental impact can also harm a victim’s ability to continue daily life as it once was before the event. For instance, the inability to look in the mirror without cringing about a scar or a limp that makes walking challenging are long-term chronic problems that didn’t exist before the accident. These are circumstances that may require compensation.
Comparing Differences: Economic vs. Non-Economic Damages
Not everyone reading this is expected to be versed in personal injury law. To keep things simple, the main difference between economic and non-economic damages is WHAT they compensate the injured party for after an injury.
To summarize:
Economic damages are measurable financial losses. This category includes personal property, medical bills, and other expenses of monetary value.
Non-economic damages address the physical and emotional injuries the person has suffered after a personal injury accident and affect quality of life and ability to function.
It’s important to note that economic damages are subject to laws and legal restrictions in the jurisdiction where the accident occurred. Rules and limits often apply to damages awarded, as well as laws that may have been broken in a car accident or other incident. Meanwhile, non-economic damages are more subjective and vary by case and by injured party. Each person who suffers this type of damage is unique, and the circumstances of their life will be considered in each case to help restore quality of life.
While economic and non-economic damages are available in most cases, you still must prove they exist with the appropriate documentation. Pain journals, experienced testimony, and other event-related documentation can help your personal injury case and help you recover the damages you need to restore a comparable lifestyle.
More About How Economic and Non-Economic Damages Matter in a Personal Injury Claim
It can be a huge mistake in a personal injury case to focus only on financial compensation. Yes, that is always the goal, but it must also cover initial economic needs and the non-economic losses that may come later and are needed to restore your life to a level much like it was before the accident. Lost salary and medical costs are a huge consideration after an accident, but they are not the full picture of life after an injury. Treatment and quality of life problems after the accident can continue and affect life going forward. If you are unable to function in daily activities due to an injury suffered in the incident, that needs to be considered in your overall settlement.
If a claim is settled too quickly, other issues may come up that were not addressed. When assessing an accident and the compensation needed, consider both economic and non-economic damages as outlined above.
It’s also important to note that insurance companies often do not consider long-term limitations or treatments in initial claim settlements when they focus only on receipts and hospital charges. If you accept an insurance settlement before you know what you are entitled to, you could be responsible for expenses that arise later, including additional medical bills and quality-of-life issues.
Make sure you ask for all the damages you experienced in the accident.
Call Keys Law Offices Today!
If you’ve been injured because of someone else’s negligence, understanding the difference between economic and non-economic damages is an important first step toward protecting your rights. An improperly handled claim can disrupt your life in an instant, leaving you with stress, injuries, monetary damages, and unanswered questions about what comes next. You may be entitled to compensation for these damages. At Keys Law Offices, we are determined to support individuals and families facing these issues and provide advice and representation for personal injury claims. With deep knowledge of how these cases are handled, our firm will strive to get to the bottom of the case, develop a strong claim, and seek the financial compensation our clients deserve.
Assistance is available, and help is only a phone call away.