Economic Vs Non-economic Damages Explained

The basic principle of personal injury law is that someone who harms another person should have to “make them whole” again – that is, to provide the injured party with the money they need to undo as many of the consequences of their injuries as possible. Some of these consequences are economic in nature, while others are, in legal terms, non-economic. Let’s explore the differences between economic damages and non-economic damages and what they might mean for your claim.

What is the Difference Between Compensation and Damages in Chicago Personal Injury Cases?

Legal terms can be deliberately confusing. For example, before defining economic and non-economic damages, you’ll need to understand the underlying terms. “Damages” refers to the monetary awards a jury might award a plaintiff in a trial. Damages can include compensatory damages, which is money that compensates a plaintiff for specific losses, like medical bills.

Compensation for losses resulting from injuries doesn’t have to take the form of jury-awarded damages. You may be more likely to receive compensation in the form of an out-of-court settlement. However, if you go to trial and receive damages for specific losses, that money also qualifies as compensation.

Juries may also award other forms of damages. For example, in Illinois, juries may award punitive damages. They award these damages to punish defendants rather than to compensate plaintiffs for their losses.

Economic vs. Non-Economic Damages: Key Differences in a Chicago Personal Injury Case

Another legal term you should understand is “loss:” a decrease in someone’s well-being as the result of an injury. Some of the losses you might incur after being injured have exact dollar values. Economic damages offset these losses. Common examples of economic damages in personal injury cases include:

  • Medical bills
  • Lost wages
  • The cost of prescriptions, medical equipment, etc.
  • The cost of travel to medical appointments

Some economic losses may be losses you’ll technically incur in the future. For example, you may require ongoing medical care if your injuries are severe. Medical and accounting experts can help you anticipate these future economic losses.

Non-economic losses, on the other hand, are those that do not have a direct financial value. Examples include:

While these losses are subjective in nature, they are no less real than the aforementioned economic losses. Personal injury law recognizes that fact by allowing injury victims to seek compensation for these losses just as they would any other.

How to Calculate Non-Economic Damages

Calculating economic damages is often relatively simple. You need to gather documentation of all your economic losses and add them up. The process only becomes complex when your economic losses are significant or are likely to extend well into the future. In either case, a lawyer can help you put a fair value on them.

Assigning a dollar value to non-economic losses is almost always complex. Legal professionals often use formulas to put an objective number on an inherently subjective experience. The following are two common formulas insurers and lawyers may use to determine the “value” of someone’s pain and suffering:

  • The per diem method – This method involves assigning a daily monetary value to your pain and suffering or similar intangible losses. This value applies to every day you struggle with pain after being injured, usually based on how much income you’d make in a day. For example, maybe the daily value of your pain and suffering is $200. Perhaps you spent 100 days recovering from your injuries. Thus, the total amount of compensation you might receive for pain and suffering is $20,000.
  • The multiplier method – The multiplier method involves assigning a value of 1.5 to 5 to your pain. The greater your pain and suffering, the greater the value. Using this formula, you would multiply this value by the total of your economic damages to arrive at a total figure.

Don’t assume an insurance company will apply these formulas correctly on your behalf. For example, a claims adjuster using the multiplier method might assign a value of 2 to your pain and suffering. You may have reason to believe the value should be greater. You can negotiate with an insurer if you believe they’ve based settlement offers on unfair calculations. Better yet, you can hire an attorney to do so on your behalf.

The Importance of Non-Economic Damages in a Chicago Personal Injury Case

a chicago personal injury lawyer signing a document on the table

The more you know about your legal rights, the better-equipped you are to demand fair compensation from the person responsible for your injuries. Seeking compensation for both non-economic losses and economic losses is important for the following reasons:

  • Seeking non-economic damages shows an insurance claims adjuster you understand your rights. They may be less likely to take advantage of you if they know you have done your homework.
  • You’re depriving yourself of money you may genuinely deserve if you don’t pursue compensation for non-economic losses. 
  • Seeking non-economic damages when you deserve them can establish a legal precedent. For example, maybe your case goes to trial. Perhaps the jury decides you deserve certain non-economic damages given your circumstances. Because of this, a plaintiff in similar circumstances in the future may reference your case. Doing so could help them show why they also deserve non-economic damages.

Remember, you don’t have to calculate and pursue non-economic damages on your own. You can hire an attorney to handle this task on your behalf. Most personal injury lawyers also work on a contingency fee basis. That means they won’t charge upfront fees for their legal services. Their fee will be a percentage of your compensation or damages. If you get nothing, you pay nothing. In other words, you’re putting nothing at risk by working with an experienced personal injury attorney.

Contact a Chicago Personal Injury Lawyer

Assigning a proper value to non-economic losses is part of a legal strategy for maximizing damages. At JJ Legal, our team of attorneys aims to help you secure the full amount of compensation or damages for which you’re eligible. A qualified Chicago personal injury lawyer can explain your rights and negotiate on your behalf with the insurance company. Learn more by contacting us online or calling us today at 312-200-2000 for a free case review.

Related Reading: