What Are Economic and Non-Economic Damages?

Damages are losses due to any injury inflicted by someone else’s actions or negligence. For personal injury lawyers, damages are typically divided into two categories: economic and non-economic.

So, what are economic damages? They include financial losses that can be calculated. These might involve medical bills, lost wages, or property damage.

And, what are non-economic damages? These refer to non-financial losses. These account for things like pain, emotional distress, or changes to quality of life.

Legal counsel must understand how different damage categories work in personal injury lawsuits. Damages are essential for seeking compensation and recouping lost earnings. This is what’s being demanded in winning demand letters.

Read on to clarify what are economic damages and non-economic damages. Discover other types of damages. And understand why these are all essential for personal injury claims looking to recover compensation and reach fair settlement.

Explore the full process of how to value a personal injury case by understanding damages as case strengths and weaknesses.

What Are Economic Damages In Personal Injury Claims

Economic damages compensate an accident victim for lost earnings. They are measurable financial losses caused by an injury. These losses are supported by documentation such as medical bills, receipts, or pay stubs.

Common types of economic damages include:

• Medical expenses: Charges for past and future care, including emergency treatment, hospital stays, surgeries, medications, and equipment
• Lost wages: Income lost from time off work, as well as reduced earnings if the injury limits future employment
• Property damage: Costs to repair or replace personal items like vehicles or electronics damaged in the incident
• Rehabilitation costs: Expenses related to recovery, such as physical or occupational therapy and long-term treatment plans
• Out-of-pocket expenses: Direct costs related to the injury, including travel for treatment, home accessibility changes, and medical supplies

A person with $15,000 in medical costs from a car accident, $5,000 in lost income, and $2,000 in property repairs would claim $22,000 in economic damages. Another example might be someone attending 50 physical therapy sessions at $200 each, claiming $10,000 for rehabilitation services.

What Are Non-Economic Damages

Non-economic damages are losses that don’t have a clear dollar value but still affect the accident victims who have been injured. These losses are based on how the injury changes someone’s daily life, emotions, and relationships. They acknowledge the emotional, mental, and personal effects that don’t come with receipts but significantly impact quality of life.

Types of non-economic damages include:

• Pain and suffering: Physical pain and discomfort caused by the injury
• Emotional distress: Feelings such as anxiety, depression, or trauma that result from the incident
• Loss of enjoyment of life: Inability to take part in activities or hobbies that were once part of daily life

A person with ongoing back pain who can no longer participate in sports may claim loss of enjoyment of life. Someone who experiences panic attacks after a crash may claim emotional distress. These examples show how non-economic damages account for real impacts that aren’t reflected in medical bills.

How To Calculate Economic And Non-Economic Damages

Document Expenses And Lost Income

To calculate economic damages, collect records that show actual costs. These include medical bills, treatment receipts, and invoices for services or equipment. For lost income, use pay stubs, tax returns, and employment records.

If the injury affects future earning potential, financial experts can estimate those future losses. They base their calculations on past work history and income, as well as the medical prognosis. These projections become part of the economic damages claim.

Detail Pain And Emotional Suffering

Non-economic damages calculations often use either the multiplier method or the per diem method:

The multiplier method: This approach takes the total economic damages and multiplies them by a number (typically between 1.5 and 5) based on the severity of the injury. More serious injuries with longer recovery times generally receive higher multipliers.

The per diem method: This assigns a daily dollar amount for pain and suffering, then multiplies it by the number of days the person experiences pain or limitations. The daily amount might be based on the person’s daily earnings or another reasonable figure.

A daily journal that tracks pain levels, mobility limitations, and emotional changes can provide useful context. Psychological evaluations can support claims related to anxiety, depression, or trauma. 

Statements from people familiar with the injured person before and after the incident help illustrate how life has changed.

When Are Economic And Non-Economic Damages Awarded

Economic and non-economic damages are awarded in civil cases. For these cases, a person brings a legal claim for harm caused by another party. These damages are part of what courts call “compensatory damage.” The damages are “compensating” to make up for economic losses caused by the incident and injury.

A standard of proof must be met for the plaintiff to be awarded damages. The person bringing the case must meet the courts requirements for “preponderance of the evidence” to prove legal responsibility for the injury.

The timeline to receive damages can vary. Some cases settle in a few months. Other cases take several years. It depends on the facts and the legal process.

Personal Injury Case Types That Involve Economic and Non-Economic Damages

Economic and non-economic damages apply across a wide range of personal injury case types. These cases feature physical harm, emotional trauma, or financial loss that occurs due to another party’s negligence or misconduct.

Common case types include:

• Motor Vehicle Accidents: Car, motorcycle, and truck collisions often involve both medical bills and pain and suffering. If an at-fault driver is uninsured or underinsured, claims may be filed under the injured party’s own policy.
• Uninsured/Underinsured Motorist Claims: These involve seeking compensation through your own insurance policy when the at-fault driver lacks adequate coverage. Economic and non-economic damages are still calculated based on the injury’s impact.
• Dog Bites and Animal Attacks: Victims may suffer physical injuries, trauma, scarring, and disfigurement—all of which warrant claims for both economic (e.g., medical care) and non-economic (e.g., emotional distress) damages.
• Premises Liability Cases: When someone is injured on another person’s property—such as in a slip and fall or due to unsafe conditions—they may be entitled to damages for lost income, hospital bills, and loss of enjoyment of life.
• Medical Malpractice: These cases involve injuries caused by healthcare providers’ errors or negligence. Claims often include long-term medical costs, reduced earning capacity, and severe emotional suffering.

Other Types of Damages: Punitive and Beyond

Some personal injury cases may involve other categories of damages. Most notable is punitive damages.

Punitive damages are meant as punishment. These damages are intended to punish the wrongdoer for especially reckless, malicious, or intentional behavior. They also deter others from acting similarly in the future. 

Courts typically award punitive damages only in cases involving egregious misconduct. Such instances include drunk driving accidents, intentional assault, or gross medical negligence.

They’re usually awarded in addition to economic and non-economic damages. Damage caps most often limit punitive damages. These caps are based on state law or a multiple of compensatory damages.

Other potential damage categories include:

• Wrongful death damages: Compensation for surviving family members, covering funeral costs, loss of income, and emotional loss.
• Loss of consortium: Though often classified under non-economic damages, this may be separately emphasized in cases involving long-term impact on close personal relationships.
• Statutory damages: In some jurisdictions, specific laws define damage amounts for certain types of cases, such as elder abuse or consumer fraud.

These additional damages are critical for ensuring legal accountability and social deterrence.

Maximizing Settlement Value Through Evidence And Technology

AI helps identify typical settlement ranges by analyzing thousands of resolved cases with similar facts. These tools use historical data and case characteristics to estimate values for both economic and non-economic damages.

EvenUp provides AI-powered tools designed to support personal injury attorneys working with both economic and non-economic damages. These tools help analyze case information, organize documentation, and develop comprehensive damage assessments based on similar cases.

EvenUp’s Claims Intelligence Platform™ supports attorneys in building more complete and fact-based case files. The platform helps organize case materials and evaluate damages using consistent logic based on real-world outcomes.

Schedule a call today to learn more.