Economic and non-economic damages are different in many ways, but they both serve an important purpose in compensating victims of personal injuries. To learn more and secure skilled representation, reach out to a Monmouth County personal injury attorney today.
How Are Economic and Non-Economic Damages Different?
Despite both being used to compensate a victim for losses sustained from an accident and injury, economic and non-economic damages differ in a variety of ways. Consider the following main differences between the two.
1. Purpose:
The intended purpose of each type of damage is one of the main differences between the two. Economic damages, for example, are designed to reimburse a victim for actual financial losses that they have sustained. These damages cover monetary losses that have a set price that the victim had to pay out of pocket or may incur in the future.
Non-economic damages compensate a victim for losses unrelated to money. It is important to recognize the mental and social impact that an injury can have on an individual’s life. These damages ensure that the victim recovers compensation for the way that the accident has impacted their daily life.
2. Types:
The actual losses that are compensated through each type of damage are different. Economic damages, as established, are designed to cover real financial losses. These include medical expenses, lost wages, a diminished earning capacity, property damage, transportation costs to medical appointments, ongoing and at-home care, and more.
Non-economic damages, on the other hand, cover non-monetary losses like physical pain and suffering, emotional distress, loss of enjoyment of life, loss of consortium, and the development of PTSD, depression, anxiety, and other mental disorders.
3. Evidence:
Another way these damages differ is in the evidence required to establish the losses. Because economic damages are objective, the evidence they rely on is verifiable information and financial records. This can include medical bills, receipts, pay stubs, property valuations, repair estimates, etc.
Non-economic damages are subjective and not as easily quantifiable. Important evidence proving these losses includes testimony from medical professionals, therapists, friends, family, and employers, as well as first-hand accounts of the victim’s experience and the way the injury has impacted their life.
4. Calculation:
Economic damages are easily calculated by collecting all relevant financial evidence, as outlined above, and adding it up. Once the amount has been totaled, the extent of the victim’s financial losses is clear.
Non-economic damages, however, are not as simple. There are several ways to calculate these losses, most notably the multiplier method, where the financial losses are calculated and then multiplied by a number from 1 through 5 based on how severely the injury has impacted the victim’s life.
Alternatively, the per diem method establishes a daily monetary value of the individual’s suffering, which is then multiplied by the number of days they have been or will be impacted by the injury.
Depending on the jurisdiction, another important way that these damages vary is in the limitation placed on the amount of compensation that can be awarded. Many states cap the amount of non-monetary damages that can be granted. However, New Jersey law does not implement a legal cap on any compensatory damages.