Economic Damages

Economic damages, also called special damages, are the quantifiable financial losses that a personal injury plaintiff has suffered as a direct result of the defendant's wrongful conduct. Unlike non-economic damages such as pain and suffering, economic damages have a relatively objective dollar value that can be calculated based on bills, pay stubs, records, and expert financial analysis. They represent the measurable, out-of-pocket financial impact of the injury on the plaintiff's life.

The most common categories of economic damages in personal injury cases include past and future medical expenses (hospitalization, surgery, medications, physical therapy, medical equipment, and long-term care), lost wages and lost earning capacity (income the plaintiff was unable to earn due to the injury, and income they will never be able to earn in the future if the injury permanently impairs their ability to work), and property damage (repair or replacement costs for property destroyed in the accident).

Calculating future economic damages presents special challenges because these losses have not yet occurred and must be estimated with reasonable certainty. Expert testimony is typically required — life care planners testify about the future medical care the plaintiff will need and its associated costs, while forensic economists testify about the present value of future lost earnings using actuarial data, wage growth projections, and discount rates. The future economic damages component of a severe injury case can dwarf the past damages, particularly in cases involving young plaintiffs with decades of working life ahead.

Economic damages calculations may be affected by several legal rules. The collateral source rule — the rule that damages should not be reduced because the plaintiff received compensation from an independent source such as health insurance or disability benefits — protects plaintiffs from having their recoveries reduced simply because they had the foresight to purchase insurance. However, the defendant may be able to introduce evidence of collateral source payments in jurisdictions that have modified the collateral source rule through tort reform legislation.