What Are Economic Damages? (How To Recover Financial Losses)

Most states have laws in place allowing plaintiffs to recover some or all of their financial losses due to an accident. Economic damages, also known as special damages, can range from covering your medical bills to your current and future earnings. Something to note is economic damages may not cover injuries like pain and suffering.

Depending on the state, different laws can apply to cover a decreased quality of life due to a vehicle accident. If you are involved in an accident, you want to be aware of the various strategies for pursuing economic damages.

What are Economic Damages?

During a negligence lawsuit, you have the option of trying to recover economic and non-economic damages. Economic damages are defined as any financial losses you experience as a result of the accident. Economic damages can also cover any financial losses expected in the future.

Since economic damages represent a tangible loss, the courts allow you to place a specific value on the damages. In simple terms, you can sue the defendant for any money you may spend or have lost due to their negligence.

A Look at The Common Types of Economic Damages

Okay, so what qualifies as economic damages can seem rather vague. However, this doesn’t mean you can start listing everything you may spend money on as a result of the accident.

For example, if your pet is riding in your vehicle during the accident and is injured, some costs may qualify as economic damages, and others will not. Your pet’s vet bills to treat an injury may be included in the lawsuit.

However, taking your pet to a therapist to deal with stress is not considered economic damage resulting from the accident—so use a bit of common sense before you start trying to recoup a long list of financial losses. Here’s a quick look at what qualifies as economic damages in most states.

Medical Bills

The injuries you sustain in an accident typically require treatment, which can include surgery, hospital stays, medications, and physical therapy. While mental health treatment is not covered for your pet, you can claim it as a financial loss.

If the lawsuit is settled in your favor, the amount awarded typically covers medical expenses from the accident’s date. Sometimes, you may need additional or ongoing care, which can also be settled in the original lawsuit. A medical expert, approved by the court, will give an estimate regarding any future care and costs.

Lost Wages

Injuries sustained in an accident can leave you out of work for days, weeks, or even permanently, which is when economic damages come into play. You can sue to recoup lost wages from the time of the accident, along with your future earning potential.

A quick note: you can only sue for future earnings when you can prove you’re unable to work. Some factors the courts will consider when determining the settlement amount are your age, industry, extent of your injuries, and average future earning potential based on your current job.

Property Damage

Property damage is something else you can include in your court case. You may receive compensation for the loss of value or recover the cost associated with repairs or replacement.

If a vehicle is damaged beyond repair, you may be compensated for its loss. The settlement amount will vary on a case-by-case basis, but courts often rely on the vehicle’s Blue Book value. To get an idea of the amount you may receive, you can always look up your vehicle make and model, and the Kelley Blue Book is a good reference place to start.

What is the Collateral Source Rule?

During your negligence case, you may hear about something known as the Collateral Source Rule. The rule works in the plaintiff’s favor by preventing evidence of previous compensation from affecting the amount you receive in your economic damages case.

Simply put, if the at-fault driver’s insurance already paid for vehicle repairs, it does not apply in the economic damages case. Just think of any previous compensation as if it never occurred.

The Collateral Source Rule even goes as far as to prevent the defendant from introducing any evidence showing you have already received some form of compensation. The rule is in place to protect injured parties and to ensure they are fully compensated for any monetary loss that occurs as a result of the defendant’s negligence.

The Difference Between Economic vs. Non-Economic Damages

Your personal injury lawsuit can also include non-economic damages. What are non-economic damages? The answer is a little complex. Basically, non-economic damages apply to anything that is difficult to place a monetary value on—instead, you’re estimating its financial worth.

Some examples of non-economic damages can include pain and suffering. If your quality of life has decreased due to the accident, this can also be considered a non-economic damage claim, though the amount you’re compensated will typically vary. It’s important to note that some states also cap the amount you can receive for non-economic damages.

Your attorney may also recommend filing for punitive damages. Punitive damages serve a single purpose. While you may receive compensation by suing for punitive damages, the primary purpose is to punish the defendant. Before you consider filing for punitive damages, it’s best to check with your attorney, as most states have limits on how much and when punitive damages are awarded.

How to Prove Economic Damages

Proving economic damages is relatively easy, especially when you keep all of the paperwork pertaining to the accident, which includes medical bills, receipts for prescriptions, repair estimates, and past pay stubs.

If you have covered some of your financial obligations, like vehicle repairs or medical bills, you will need to submit any canceled checks you may have. After submitting your paperwork, the final step is to await the court’s or claims adjustor’s decision.

Talk to an Attorney About Your Negligence Case

When you want to recover economic damages due to someone else’s negligence, it’s always best to speak to a personal injury attorney first—they can walk you through your state’s various laws and ensure you receive full compensation for your economic losses.

With an experienced personal injury attorney in your corner, they’ll diligently work to ensure that you’re protected and that you get the fair compensation you’re entitled to.