Fact: most people don’t know what damages they should actually be awarded after an accident.
They settle for the first offer. They lowball themselves. They leave money on the table.
Here’s the problem:
If you don’t know what damages mean in a personal injury lawsuit, you won’t know how much you should recover. Which means… you’re unlikely to walk away with a fair shake.
Here’s the solution:
This guide explains everything you need to know about damages in a personal injury claim.
What’s Covered:
- What Are Damages in a Personal Injury Lawsuit?
- The Three Types of Damages Explained
- What Factors Affect the Value of a Claim?
- How are Damages Calculated?
- Why Having the Right Help Matters
What Are Damages in a Personal Injury Lawsuit?
Damages refer to the monetary compensation awarded to an injured person after an accident.
Essentially… think of damages as society’s way of making things right again. They cover all the financial losses caused by the injury. Physical pain and mental trauma, lost wages, ruined property.
Damages can apply to nearly any types of injury cases. Personal injury lawyers understand the difference between them which is why getting quality personal injury legal services early can make all the difference in the final award.
Damages fall under different categories based on what exactly was damaged during the accident. Many people don’t realize this and as a result, they miss out on potential compensation.
The Three Types of Damages
Here are the three different types of damages:
1. Economic Damages
Also referred to as “special damages”, economic damages are direct financial costs associated with the injury. Some costs are easy to calculate. Hospitals didn’t wave a magic wand and decide your medical bills out of thin air!
Examples of economic damages include:
- Medical Expenses
- Lost Wages
- Loss of Earning Capacity
- Property Damage (pretty common in car accident cases)
- Out-of-pocket costs associated with the injury (travel to doctor’s appointments, wheelchair ramps for the house, etc.)
Basically… if it comes with a receipt, it falls under economic damages. Medical records and pay stubs become your best friends.
2. Non-Economic Damages
There’s a good chance your injuries fall under this category. Non-economic damages are intangible losses that don’t have a clear “price tag.”
They can include:
- Pain and Suffering
- Emotional Distress
- Loss of Enjoyment of Life
- Loss of Consortium
These are essentially things that make life… well… worth living. And they’re compensated for during the damages phase of your claim.
Non-economic damages are typically calculated using something called a “multiplier method.” Your economic damages are multiplied by a number between 1.5 and 5 (depending on severity) to reach a rough line figure for “pain and suffering.”
Which is significant if you ask me…
3. Punitive Damages
Punitive damages are special. They don’t compensate the victim for losses like the other two categories do. Instead, they punish someone for particularly egregious actions or intentional conduct.
Courts don’t award punitive damages in every case that qualifies. But when they do, they can reach into the millions.
Take this recent example. A New York family was awarded $287 million in damages in 2024 after their son was killed by a defective motorcycle navigation system. $240 million of that was punitive damages.
What Factors Affect the Value of a Claim?
Now that you understand damages let’s talk about what affects your case’s total value.
The most obvious factor is obviously injury severity. Someone who suffered a permanent injury will likely be awarded higher damages than someone who broke their arm.
But other factors come into play like:
Shared Fault:
Most states operate under some version of comparative negligence. Basically… if you were partially at fault for the accident, your total compensation gets reduced by your percentage of fault. Injured party was 20% at fault and owed $50,000 they would only receive $40,000.
Insurance Limits:
The at-fault party’s insurance policy might limit how much can be awarded even if your damages are much higher.
Evidence:
You’d be surprised how many claims are lowered because of poor legible medical records or lack of proof of income.
Calculating Damages
This may surprise you…
Only around 4-5% of personal injury cases ever see the inside of a courtroom. The majority of claims are settled through mediation or negotiation.
Your ability to prove your damages amount becomes even more important.
Here’s What You Need To Know:
Attorneys negotiate with insurance companies on your behalf (more on that later). Insurance companies employ adjusters whose job is to pay claimants as little money as possible.
Here’s the process most attorneys will follow when calculating damages:
- Sum up all economic losses.
- Apply multiplier to economic damages to figure out pain and suffering.
- Consider any adjustments due to shared fault.
- Consider any policy limits.
- Negotiate.
Just remember… every single step above is a fight.
How to Get the Most Out of Your Injury Case
70% of personal injury claimants ended up with a payout. But that doesn’t mean the payout was fair.
Here’s what you need to do to make sure you have a strong claim:
Know the difference between economic, non-economic, and punitive damages. The first two categories are almost always awarded. Not understanding compensation can lead to you leaving money on the table.
Here are common mistakes that ruin injury claims:
Accepting the first settlement offer. You’ll never know the full extent of your injuries immediately after an accident.
Not accounting for pain and suffering. Just because emotional distress doesn’t show up on an invoice doesn’t mean it isn’t real.
Accepting shared fault reduction. If you were texting when you crashed into someone’s car you should accept that your compensation will be reduced.
Negotiating without a lawyer. Insurance companies have teams of lawyers on staff. You shouldn’t deal with them without representation.
Understanding Damages: Wrapping It Up
To quickly recap…
There are three different categories of damages in a personal injury case. They cover financial losses, emotional trauma, and reckless endangerment.
Economic Damages
Compensate for lost wages and expenses.
Non-Economic Damages
Compensate for intangible losses like pain and suffering.
Punitive Damages
Are awarded in rare cases to punish intentional negligence.
Factors like injury severity, shared fault percentages, and insurance policy limits affect the total number awarded. But having a solid understanding of damages and how they’re calculated can help ensure you leave the negotiating table with everything you deserve.
Don’t settle for less than you need to fully recover from your accident. Call today.
