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Economic Vs. Non-Economic Car Accident Damages: What Is the Difference?

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Filed under Automotive, Editorial

2022 kia niro phev side

You could file a personal injury claim if you suffered a bodily injury from a car accident. That is because you may be entitled to compensation for your expenses to recover from the injuries. 

Losses suffered in a car accident fall into two categories: economic and non-economic damages. Keep reading to learn more about economic and non-economic damages and the importance of hiring a car accident attorney. 

Economic Damages 

Economic damages are more specific and straightforward than non-economic ones because they include all the financial losses you suffer in a car accident. Typically, economic damages include medical bills and lost wages due to the car accident. 

Medical expenses include hospital bills, emergency medical care, ambulance costs, prescription drugs, surgery, extensive medical treatment, rehabilitation costs, and any modifications to the house or vehicle. In addition, the income loss resulting from the accident due to being unable to work also counts as economic damages. 

Economic damages can be more easily determined compared to non-economic damages, as an exact dollar amount can be assigned to the former. For example, if a car accident victim’s medical expenses came to $4,000 and their loss of income during the treatment was $3,000, they can recover $7,000 for their economic damages. 

Car accident victims can also be compensated for future medical expenses and lost wages. 

Non-Economic Damages

Non-economic damages are the legal term for compensation for intangible losses that can be more tricky to understand and calculate without legal consultation. That is because there’s no standard dollar amount for non-economic losses suffered in an auto accident. Non-economic damages include: 

  • Mental Anguish: Car accidents can be stressful and traumatic, impacting the mental health of victims. Injuries sustained in the accident can be life-altering. Individuals who have difficulty coping with the accident’s aftermath can develop depression, anxiety, PTSD (post-traumatic stress disorder), and additional mental health problems.  
  • Loss of Enjoyment: Serious accidents can have adverse consequences. For instance, a person injured in a crash can be permanently disabled or get scars that affect their social interactions, leading to impaired quality of life.  
  • Loss of Companionship: People who suffer the death of a family member or loved one in a car accident can seek non-economic damages for their loss of consortium. 

How are Non-Economic Damages Calculated?

Non-economic damages are also known as pain and suffering expenses. Typically, these expenses are determined using either the multiplier method or the per diem method. 

The Multiplier Method

In this method, the economic damages suffered in the auto accident are assigned a number between 1 and 5 depending on the severity, where one is the lowest and five is the highest. For example, if someone suffered economic damages of $7,000 and the severity of their injuries is assigned the multiplier of 3 by the court, they can recover $21,000 in non-economic damages.  

The Per Diem Method 

This method is more complicated than the multiplier method because the victim’s pain and suffering are assigned a dollar value for each day of the recovery. Then, that dollar value is multiplied by the number of days the individual remains affected by their injuries.  

How Can an Attorney Help?

Every state has a specific statute of limitations for starting a personal injury claim or filing a lawsuit. If you suffered severe injuries, you must file before the deadline. An attorney can guide you on the statute of limitations and legal matters related to your case. 

In addition, your attorney can handle the litigation processes for you. An experienced attorney will have expert knowledge of how to guide you on what damages you can claim and how to obtain them. You can learn more about how a car accident lawyer can help you get justice.


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