Types of damages in a car accident claim

The three kinds of damages#

"Damages" is the legal word for the money a court can award, or an insurer can pay, for losses someone else caused. Economic and non-economic damages are both "compensatory": they aim to put you, as far as money can, where you would have been without the crash. Punitive damages are different. They are not meant to repay anything.

Economic damages: losses with a paper trail#

Economic damagesEconomic damages. Losses with a receipt or a paycheck behind them: medical bills, lost wages, repairs and other out-of-pocket costs. Glossary are the easiest to add up, because each one has a document behind it. They usually include:

• Past medical expenses: ambulance, emergency room, hospital stays, surgery, imaging, physical therapy, prescriptions and equipment such as braces or crutches.
• Future medical expenses: care your doctors expect you to need, such as more surgery or long-term therapy. This usually needs a doctor's opinion.
• Lost income: wages, overtime, tips, commissions and sick or vacation days you had to use. Our guide to lost wages explains the proof.
• Lost earning capacity: a lasting drop in what you are able to earn, which can reach far beyond the paychecks you have already missed.
• Property damage: repairs or the value of your car, a rental car and damaged items inside it. See property damage and diminished value.
• Other costs: mileage and parking for appointments, childcare during treatment, and paid help with chores you cannot do.

A medical bill can show two numbers: what the provider charged and what an insurer actually paid. States treat the gap differently. In Texas, recovery of past medical expenses is limited to the amount actually paid or incurred by or on behalf of the claimant. In Florida, evidence of past bills that have been paid is limited to the amount actually paid, regardless of the source of payment. Other states use other rules, so the same bill can count differently from one state to the next.

Non-economic damages: harm without a price tag#

Non-economic damagesNon-economic damages. Losses without a price tag, such as pain, suffering, emotional distress and loss of enjoyment of life. Glossary cover the human cost of an injury. Texas law gives a useful list: physical pain and suffering, mental or emotional pain or anguish, loss of consortium, disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life and injury to reputation. Other states use similar lists in their statutes and jury instructions.

These damages have no receipt, so they depend on how well the harm is shown. A broken wrist that heals in six weeks and one that ends a career as a carpenter can involve similar medical bills and very different losses in daily life. Our guide to pain and suffering covers what counts, how it is proven and how juries are told to decide it.

A spouse can sometimes bring a separate claim for loss of consortiumLoss of consortium. A claim by the spouse (in some states, other close family members) of an injured person for the loss of companionship, care and relationship caused by the injury. Glossary, the loss of companionship and care caused by the injury. When someone dies, family members may have a separate wrongful death claim.

Punitive damages and state caps#

Punitive damagesPunitive damages. Extra damages meant to punish very bad conduct, not to repay a loss. Many states cap them; Texas calls them exemplary damages. Glossary are meant to punish and deter, not to repay a loss. Ordinary carelessness, such as misjudging a turn, is not enough. In Texas, a claimant must prove by clear and convincing evidence that the harm resulted from fraud, malice or gross negligence. In Georgia, the standard is clear and convincing evidence of willful misconduct, malice, fraud, wantonness, oppression or an entire want of care that suggests conscious indifference to consequences.

Many states also cap punitive damages. For car crashes, the statutes themselves point to impaired driving, as these three examples show:

Punitive damages are treated differently for tax purposes too. Federal tax law puts it this way: Damages (other than punitive damages) received on account of personal physical injuries or physical sickness are excluded from gross income. The words "other than punitive damages" matter: see are settlements taxable.

Caps on non-economic damages#

Caps on pain-and-suffering damages vary widely, and many of the best-known ones apply only to medical malpractice. Texas is an example: it has no general cap on pain-and-suffering damages in an ordinary car-crash case, and its well-known non-economic cap applies to health care liability claims.

A few states do cap non-economic damages in most injury cases, which can include car crashes. Ohio limits them to the greater of $250,000 or three times the plaintiff's economic loss, up to $350,000 per plaintiff and $500,000 per occurrence. The cap does not apply to losses from permanent and substantial physical deformity, loss of use of a limb, loss of a bodily organ system, or a permanent injury that prevents the person from caring for themselves, and it does not apply to wrongful death claims.

Claims against a city, county or state agency are often limited by a tort claims act, such as the one in Texas. Your own state's page in our state-by-state guide lists the rules that apply there.

The duty to mitigate damages#

The law expects an injured person to take reasonable steps to limit their losses. This is called mitigation of damagesMitigation of damages. Your duty to take reasonable steps to limit your losses after an injury, such as following medical advice. Losses you could reasonably have avoided may not be recoverable. Glossary. California's pattern jury instruction, for example, says an injured person cannot recover for harm that the defendant proves the injured person could have avoided with reasonable efforts or expenditures.

The standard is reasonableness, not perfection. The same instruction asks jurors to consider the person's circumstances at the time, including whether they could make the effort without undue risk or hardship. Reasonable costs spent trying to limit the harm can be part of the claim.

Mitigation disputes often involve gaps in treatment, not returning to available light-duty work after a doctor's clearance, or leaving a damaged car unrepaired while rental costs grow.

The collateral source rule#

Often someone else pays part of your losses before the claim is resolved: your health insurer, an employer's sick-pay plan or a disability policy. The collateral source ruleCollateral source rule. The rule on whether money you received from other sources, such as health insurance, reduces what the person at fault must pay. States handle it very differently. Glossary decides whether those payments reduce what the at-fault driver owes. States answer that question very differently.

• Florida changed the traditional rule by statute: the court reduces an award by amounts already paid from collateral sources such as health or disability insurance, except sources that have a right to be repaid. Florida's law also says Medicare, Medicaid and workers' compensation benefits are not collateral sources for this purpose.
• Texas limits past medical expenses to the amount actually paid or incurred by or on behalf of the claimant, which shrinks the gap between billed and paid amounts.
• Other states keep a stronger version of the rule, under which payments from your own insurance do not reduce the damages.

Where a source of payment has a right to be repaid, such as a health plan with subrogation rights or Medicare, it is usually paid back out of the settlement. Our guide to medical liens and subrogation explains how that works.

What damages do not include#

Three things change what you actually receive, even when the damages are clear:

1. Your share of fault. Most states reduce damages by your percentage of blame, and many bar recovery at 50% or 51%. Try the fault-rule explainer.
2. Insurance limits. The at-fault driver's policy limits cap what their insurer will pay, though not what they legally owe.
3. Fees, costs and liens. In most injury cases each side pays its own lawyer, so a contingency fee, case costs and repayment of liens come out of the recovery.