What Are Economic Damages?

No one anticipates being injured, but accidents happen every day in California. People get hurt in car accidents, construction sites, medical malpractice, and a host of other incidents. Often this leads to serious injuries that wreak havoc on your life. 

If another party has injured you, you may be eligible for damages caused by the accident. If so, you’ll want to have a reasonable estimate of your case’s value so that your lawyer can litigate at trial or negotiate a fair settlement.

There are two types of damages in California – compensatory and punitive. 

Explaining Compensatory Damages

Compensatory damages attempt to reimburse the plaintiff for what they have lost due to an injury or accident. Their purpose is to put the plaintiff back in the same position they were in before the injury.

In California, there are two categories of compensatory damages:

  • Economic damages. These damages reimburse you for financial losses resulting from your accident and injuries.
  • Non-economic damages. These damages are not financial in nature. Instead, they compensate you for pain and suffering, loss of consortium, and similar types of subjective losses.

Punitive damages are a more rare form of damages. They are designed to punish the defendant for their conduct rather than compensate for your losses.

Economic Damages Available in a California Personal Injury Case

Economic damages can be calculated, representing your total losses due to:

  • Medical expenses
  • Lost income
  • Property damage
  • Substitute domestic services

Other costs related directly to the injury can also be reimbursable. These damages are relatively easy to prove. Medical bills, pay stubs, and other documentary evidence can be used to show one’s financial losses.

Medical Expenses Calculation

In California, an injured person “is entitled to recover the reasonable value of medical care and services reasonably required and attributable” to the defendant. This medical care includes expenses for past, current, and future treatment.

Calculating past and current medical expenses is relatively straightforward since you will likely have documentation of medical bills and all associated costs.

It’s harder to evaluate the expenses of future medical needs. However, it’s crucial to get a good estimate of these future costs. Once you are awarded a judgment or settle the case, you can’t return to the court or defendant and ask for more damages.

Often, your lawyer will hire a medical expert. 

This expert will consider many future needs, including:

  • Surgical procedures
  • Blood tests and other procedures like X-rays and MRIs
  • Pain medication prescriptions
  • Future medical appointments
  • Assistive devices like wheelchairs or prosthetics
  • Assisted living
  • Long-term care
  • Counseling

The medical expert will review the anticipated expenses above and then factor in inflation to get the final estimate. The expert will also consider additional factors such as age, general health before the injury, and your area’s quality of medical care.

When the medical expert has completed their calculations, they will discount the amount to reduce costs down to their present value.

Lost Income Calculation

California recognizes two types of lost income:

  • Loss of employment. This includes past lost wages and future lost wages.
  • Loss of business or employment opportunities. This is also known as loss of earning capacity.

Past loss wages are usually easy to calculate. For example, with a $5,000 monthly salary and four months of missed work due to your injury, the lost wages are $20,000. This, however, can get more complicated if you earn overtime or self-employed and your monthly income is variable.

Your Future Lost Wages and the Loss of Earning Capacity

These are more difficult to estimate. 

The following factors can be relevant:

Age. Are you 31 years old in a successful business, or are you 58 and had been ready to retire a month before the injury occurred?

Future of the Industry. Are you working in a declining industry, with few prospects, like bookstores or textile mills? Or are you in a thriving field with lots of growth potential? Or maybe you are self-employed with a solid business plan outlining an aggressive expansion strategy in the coming years.

Raises and Promotions. What is the potential for raises in your job? Is there a career track leading to promotions, or have you gone as far up as you can?

Reduced Capability. Are you permanently injured in a way that will reduce or eliminate your ability to work in your chosen field?

These factors and more help estimate lost wages and loss of earning capacity.

Losses already incurred, such as medical expenses and lost wages, can be calculated quite accurately. However, estimating future medical costs, lost wages, and loss of earning capacity requires a lot more work and expertise – and may entail substantial litigation. 

You need experienced personal injury lawyers to help you estimate the value of your economic damages. An attorney will help you find the right experts to project future medical expenses and lost income. These experts can make all the difference in a successful jury verdict or settlement.