Two Categories of Compensatory Damages
Compensatory damages in personal injury cases are divided into two categories: economic damages (also called special damages) and non-economic damages (also called general damages). Both are designed to compensate the injured person, but they cover different types of losses.
Economic Damages
Economic damages are quantifiable financial losses that can be documented with bills, pay stubs, invoices, and receipts. They include: past and future medical expenses, lost wages and lost earning capacity, out-of-pocket expenses (transportation to medical appointments, prescription costs, medical equipment), and household services the injured person can no longer perform.
Non-Economic Damages
Non-economic damages compensate for the subjective, intangible impact of injuries. They include: pain and suffering, emotional distress, loss of enjoyment of life, disfigurement and scarring, loss of consortium (impact on spousal relationship), and loss of quality of life. These damages are harder to quantify and are often where significant disagreement between parties occurs.
How Non-Economic Damages Are Calculated
There is no formula for non-economic damages. Common approaches include the "multiplier method" (multiplying economic damages by a factor of 1.5 to 5 based on severity) and the "per diem method" (assigning a daily dollar value to pain and suffering). Insurance companies and plaintiff attorneys frequently disagree on these figures.
Damage Caps
Some states impose caps on non-economic damages — particularly in medical malpractice cases. These caps limit the maximum amount a plaintiff can recover for non-economic losses regardless of severity. An attorney familiar with your state's laws can advise on any applicable caps.
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