What are Economic Damages?
What are some examples of economic damages?
What are the essential elements you should know!
In this article, I will break down the legal definition of Economic Damages so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let’s define economic damages and see how it works!
Are you ready?
Let’s get started!
What Are Economic Damages
Economic damages is a legal term referring to monetary losses suffered by a person that can be objectively verified with evidence by account statements, receipts, or documents.
In other words, when a person suffers “economic damage”, the person has effectively lost money, assets, income, wages, property, or any other type of financial loss that can be proven through documentary evidence.
For example, in a medical malpractice case, a plaintiff can claim to have suffered economic damages that include:
- Past and future medical expenses
- Past and future loss of earnings
- Loss of property or use of property
- Medical device expenses
- Caregiver costs
- Domestic service costs
- Rehabilitation costs
- Out-of-pocket expenses
- Loss of earnings
- Lost earning capacity
- Loss of wages
- Loss of business opportunities
As you can see, economic losses can be monetarily quantified by simply adding up all the financial and monetary losses suffered by the plaintiff.
Economic damages can be contrasted with non economic damages that refers to non-monetary losses suffered by a person.
For example, in a personal injury lawsuit, a plaintiff may claim non economic damages for pain and suffering, mental anguish, stress, loss of enjoyment of life, and other psychological or emotional losses.
Non economic losses are not easily verifiable through objective documents and records but are more subjective damages that are unique to the plaintiff and are generally evaluated on a case-by-case basis.
Economic Damages Definition
What is the legal definition of economic damages?
According to Justia, economic damages are defined as:
Economic damages are tangible damages that can easily be quantified, and their value does not change depending on the jury that is evaluating them.
A key feature of this definition is that economic damages are tangible damages and any person assessing the damages will reach the same value.
The reason that’s the case is that economic damages are easily proven using bank records, bank statements, receipts, documents, and records.
In the context of a civil lawsuit where a person claims damages from another to compensate for a loss, the compensatory damages can be either economic damages (monetary loss) or non economic damages (psychological or emotional harm).
The actual legal definition of economic damages should be considered based on the applicable law.
For example, further to the California Civil Code, the legal definition of economic damages is defined as follows:
(a) In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint. Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate judgment shall be rendered against that defendant for that amount.
(b)(1) For purposes of this section, the term “economic damages” means objectively verifiable monetary losses including medical expenses, loss of earnings, burial costs, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment and loss of business or employment opportunities.
(2) For the purposes of this section, the term “non-economic damages” means subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.
Types of Damages
What are the different types of damages that a person can legally claim from another?
In essence, we can categorize damages in three categories:
- Economic damages
- Non economic damages
- Punitive damages
Economic damages refer to monetary damages suffered by a person seeking compensatory damages in court.
They are considered “economic” damages as they can easily be economically or financially determined and valued.
Non economic damages refer to non monetary damages suffered by a person seeking compensatory damages in court.
They are considered “non economic” as the person claiming them did not lose money, an asset, or property to show for it.
In fact, the non economic losses are suffered by the individual emotionally, physically, or psychologically.
Finally, you have punitive damages referring to damages awarded by the court or jury to punish the conduct of the defendant.
The objective of punitive damages is not to deter the defendant from repeating the same conduct or behavior in the future.
Economic vs Non Economic Damages
What’s the difference between economic and noneconomic damages?
In essence, a plaintiff’s economic damages can be objectively verified through records and documents whereas noneconomic damages are more subjective and evaluated based on the pain, suffering, emotional harm, and psychological condition of the plaintiff.
For example, economic damages can include objectively verifiable elements such as:
- Loss of salary
- Loss of income
- Loss of property
- Property repair costs
- Medical bills
- Therapy expenses
“Economic damages” can be proven through the filing of evidence such as invoices, statements, receipts, and records without necessarily having the need to produce an expert witness, expertise or an expert’s evaluation of the damages.
Noneconomic damages can include more subjective elements such as:
- Emotional distress
- Mental anguish
- Loss of companionship
- Loss of consortium
- Loss of enjoyment of life
- Physical impairment
- Loss of reputation
Noneconomic damages are generally established by the plaintiff through the production of expert reports determining the different types of noneconomic injuries suffered by the victim and the “value” of such injuries.
Liability Cap on Economic Damages
In most states in the United States, a person who suffers “economic damages” will have the ability to request full and unlimited compensation from the court.
In other words, there are no liability caps set by law limiting the amount of economic damages suffered by a person.
For example, if a person gets into a catastrophic injury and suffers $5,000,000 in financial losses, the court will condemn the at-fault party to pay the $5,000,000 to the extent the plaintiff is able to prove it.
On the other hand, there are many states that limit the amount of money a person can claim in noneconomic damages.
To prevent court awards that are excessive or sensational (in the hundreds or even billions of dollars), many states have adopted laws to limit damages for pain and suffering to ensure that healthcare professionals do not stop performing high-risk operations or pass on their costs to their patients making healthcare financially inaccessible.
For example, the law may establish a $250,000 cap on noneconomic damages for medical malpractice lawsuits whereby the victim of an injury can get full compensation for all the financial losses and get an additional sum of $250,000 for the pain and suffering.
The best thing to do is to consult with an experienced personal injury attorney so you can properly evaluate the damages that you may be able to claim in your case.
In certain states, even though you may suffer economic damages, you may not be able to recover everything depending on how the courts allocate responsibility and whether the state follows a contributory negligence rule or comparative negligence rule.
Economic Damages Examples
What are some examples of economic damages?
Let’s look at a few examples of economic damages to better illustrate the concept.
We’ll look at a personal injury case as that’s where economic damages are generally sought by plaintiffs.
Imagine a person is hurt in a car accident and sues the negligent driver liable for the accident.
The victim of the car accident has suffered financial losses for which she wants economic compensation from the defendant.
In court, the victim was able to prove the following economic damages:
- $50,000 in surgery costs
- $100,000 in rehabilitation costs
- $1,000 in transportation costs
- $20,000 in medical equipment and devices
- $100,000 in lost earnings
- $20,000 in household services
Determining economic damages for this accident will consist of adding all the above financial losses.
The victim’s total “economic” loss amounts to $291,000.
If you are dealing with a civil lawsuit or personal injury claim, you should consult a personal injury attorney to get legal advice on how much economic damages you may be entitled to.
Economic Losses Takeaways
So there you have it folks!
What does economic damage mean?
What’s the difference between economic and non economic damages?
In law, economic damages refer to a type of damage or loss that a person can claim in court that is objectively measurable and represent real losses.
In other words, if Mary was in a car crash suffering $100,000 in surgery and medical costs, this is economic damage that is measurable and Mary can prove having paid for it using her personal assets or having borrowed money to pay for it.
Any judge, jury, or trier of fact looking at Mary’s medical expenses can easily evaluate her total economic damages at $100,000 as the evidence can clearly establish the value of the economic damage.
On the other hand, non-economic damages are damages that are subjective and non-monetary losses such as pain, suffering, loss of enjoyment of life, stress, anxiety, or other similar damages.
Non-economic damages can be valued differently by different jurors, judges, or courts as the law is trying to put a value on negative emotions felt by a person, emotional pain, or psychological harm.
In essence, in most cases, a person filing a civil lawsuit can claim full and complete compensation for all economic damages suffered, such as:
- Lost earnings
- Past and future medical expenses
- Home care services
- Medical device costs
- Rehabilitation and therapy costs
I hope I was able to provide you further clarity on the meaning of economic damages, economic damages vs non economic damages, and their nuances.
Let’s look at a summary of our findings.
Economic Damage Summary
If you enjoyed this article on Economic Harm, I recommend you look into the following legal terms and concepts. Enjoy!
You May Also Like Related to Economic Compensatory Damages
Duty of care
Elements of negligence
Loss of companionship
Motor vehicle accident
Non economic damages
Pain and suffering damages
Wrongful death claim
Wrongful death lawsuit
Related to Lawsuits And Tort
Attorney vs lawyer
Boutique law firm
Collateral source rule
Cost of litigation
Medical malpractice insurance
Medical malpractice lawsuit
Personal injury lawyer
Types of injuries