Let’s face it.
Medical bills compensation after an injury is one of the biggest gray areas for most folks.
After walking away from an accident, most people have no idea what they can — and cannot — claim when it comes to compensation.
And that can come with serious consequences.
What they don’t realize…
There are actually two very different types of damages that injury victims can claim. Economic damages and non-economic damages.
Knowing — and claiming — both types of compensation can mean the difference between a fair settlement and leaving money on the table.
Let’s dive into it…
What’s inside this guide:
- What Are Economic Damages?
- What Are Non-Economic Damages?
- How Are Non-Economic Damages Calculated?
- Economic vs Non-Economic Damages
- Why Do You Need To Claim Both Types?
What Are Economic Damages?
Economic damages are compensation for all the money lost or spent as a result of being injured.
This includes all medical bills and expenses incurred because of accident related injuries.
Since there is an actual dollar amount attached to every item in this category, it’s pretty simple to calculate.
That makes economic damages the bulk of most injury claims.
Here are some examples of economic damages:
- Medical bills, hospital stays
- Costs for future medical treatments
- Lost wages from missing work
- Reduction in future earning potential
- Repair or replacement of damaged property
- Out of pocket expenses needed for recovery
Things like travel to and from doctor appointments, medication costs, and injuries can also be factored in.
Medical bills compensation covers not just what has already been paid out — but also what will need to be paid in the future for things like treatment, medication, therapy, and long term care.
Working with a personal injury lawyer in National City early can help immensely with calculating all of the medical bills compensation deserved — including future medical costs that are easily forgotten without legal representation.
Don’t forget…
Economic damages can also include losses that reach far into the future. If being injured means not being able to earn the same amount of income for years, that estimated financial loss should be included in the claim.
What Are Non-Economic Damages?
Non-economic damages are a completely different story.
They compensate injury victims for the ways an accident impacted their life that don’t have a bill attached to them.
Things like pain and suffering and mental anguish.
Here’s what qualifies as non-economic damages:
- Pain and suffering
- Emotional trauma and anxiety
- Loss of enjoyment of life
- Disfigurement
- Loss of consortium
- Mental anguish and PTSD
Calculating non-economic damages is less cut-and-dried than economic damages. After all…
How do you place a dollar amount on emotional pain? Or loss of enjoyment?
Non-economic damages require documentation of a different kind. Pain journals, testimony from family and friends, and even expert witnesses can help prove these damages in court.
But they matter. Often non-economic damages awards exceed economic damages in serious injury cases.
How Are Non-Economic Damages Calculated?
There are two ways that non-economic damages are commonly calculated. Keep in mind… neither of these methods are a hard-and-fast rule that a jury will follow.
They’re simply starting points for negotiations.
Let’s take a look:
1. The Multiplier Method
This method takes total economic damages and multiplies them by a number between 1.5 and 5.
The multiplier is dependent on the severity of the injury. So if medical bills total $30,000 and an attorney uses a pain and suffering multiplier of 3 — total compensation for non-economic damages would be $90,000.
2. The Per Diem Method
This method assigns a set dollar value to every day lived with pain and suffering.
This can sometimes be based on daily wage earnings. That dollar amount is then multiplied by however many days the victim is expected to suffer.
For example… Say someone earns $100 per day at their job. They injured their back in an accident and will have to live with the pain for 2 years. Using the per diem method, they’d be entitled to $73,000 in pain and suffering compensation ($100 x 365 days x 2 years).
The Key Differences Broken Down
Still confused about the difference between economic damages and non-economic damages?
Here’s an easy chart to break things down:
| Economic Damages | Non-Economic Damages | |
|---|---|---|
| Definition | Money spent or lost as a direct result of injuries suffered. | Subjective injuries that don’t have a bill associated with them. |
| Examples | Medical expenses. Lost income. Repairing or replacing damaged property. | Pain & suffering. Loss of enjoyment. Anxiety. Emotional trauma. |
| How To Prove | Attach bills, pay stubs, receipts, etc. to the claim. | Pain journals. Loss of life testimony from family members. Expert witnesses. |
| How They’re Calculated | Simple addition. | Multiplier or per diem method. |
| Damage Caps? | Rarely capped. | Depending on state, can be capped. |
Make sense?
Why Do You Need To Claim Both Types?
Here’s a fun statistic…
Between 2021 and 2024, over 5,800 personal injury settlements were reached with the average settlement coming out to $55,056. But some were far lower — and some were much higher.
The difference between a poorly prepared injury claim and a claim that fights for maximum compensation is understanding damage types.
Insurance companies know this too. Their initial settlement offers average 40–60% lower than what people actually receive after negotiating with an attorney.
And just because states don’t cap economic damage awards doesn’t mean non-economic damages should be tossed aside.
Non-economic damage caps are common in California. For California personal injury lawsuits involving medical malpractice, the non-economic damage cap was raised from $250,000 to $350,000 in 2023. The cap increases each year, topping out at $1.195 million in 2033.
Negligent motor vehicle crashes cost the U.S. an estimated $417 billion per year in economic damages. That doesn’t even consider the pain and suffering costs associated with injuries to drivers, passengers, and pedestrians.
How do you protect yourself against losing either type of damage?
- Retain every single medical bill, receipt, and invoice
- Keep a detailed record of days missed from work and lost income
- Keep a pain journal and record recovery from day one
- Ask family and friends to provide written testimony about the injuries
- Work with a qualified attorney who can accurately calculate the entire injury claim
Calculating economic damages is the floor of an injury settlement.
Claiming non-economic damages correctly can take a case from great to incredibly fair.
Putting It All Together
Let’s recap real quick:
- Economic damages = Compensation for money spent or lost because of an injury
- Non-economic damages = Compensation for the injuries that don’t come with a bill
- Both damage types require proof — economic with bills and receipts, non-economic with journals and testimony
- There are two basic ways to calculate non-economic damages: multiplier or per diem
- Working with a personal injury attorney can help ensure both types are claimed correctly
Before walking away from an injury claim — read this one last time and make sure the difference between economic damages and non-economic damages is fully understood.
It could mean everything to the settlement.
