Damages

If you’re dealing with legal issues, understanding confusing legal terms can be challenging. Andrew Kryder, Esq., founding partner of the personal injury law firm The Kryder Law Group, LLC Accident and Injury Lawyers, is here to help. In this legal glossary, he explains the meaning of “damages” in personal injury cases.

What Does “Damages” in Personal Injury Cases Mean?

Damages are monetary compensation awarded to an injured party for losses caused by negligence or unlawful acts. Economic and non-economic damages are intended to restore the plaintiff to their pre-injury state as much as possible and cover medical expenses, lost wages, pain and suffering, and other losses. The legal system seeks to provide fair compensation based on the severity of the injury and the extent of the loss.

What Are the Types of Damages Possible in Personal Injury Cases?

In personal injury cases, damages can be compensatory or punitive.

Compensatory Damages

The most common types of damages in a personal injury case are compensatory damages. They are intended to compensate the victim from a monetary standpoint for injuries and losses suffered from the accident. They can be either special or general damages.

Special Damages

Also called economic damages or actual damages, special damages cover things with an easily-quantifiable monetary value like medical bills or lost income.

General Damages

General damages are also called non-economic damages and cover less tangible things like pain and suffering, emotional distress, or loss of enjoyment of life.

Daños punitivos

Punitive damages are less common in personal injury cases and punish the defendant for wrongful conduct, aiming to deter similar behavior in the future.

What Affects the Amount of Compensatory Damages?

The severity and permanence of injuries greatly impact compensation amounts. More serious, long-term injuries often result in higher payouts because they can disrupt daily life, causing physical limitations, emotional distress, and suffering. Medical expenses for treatment, rehabilitation, and ongoing care can quickly add up. Being unable to work leads to lost income and reduced future earning potential, adding to the financial burden. Property damage and other financial losses are also considered.

How Are Damages Awarded?

Damages can be awarded through settlements made out of court or by judgments in court cases.

Out-of-Court Settlements

These settlements are reached when both parties agree to resolve the matter through negotiations or mediation—with or without an attorney. This method is faster, cheaper, and less stressful than a court trial. The settlement amount is based on evidence like medical bills, lost income, and other expenses.

Personal Injury Cases in Court

In court cases, damages are awarded based on evidence to determine liability and appropriate compensation. Factors include physical injury severity, financial losses, and the impact on the plaintiff’s life. Punitive damages may also punish reckless behavior. While court rulings can lead to higher compensation, the process is often longer and more complex.

Are Damages Taxable?

Tax implications of damages depend on the type awarded and local tax laws. Compensatory damages for medical expenses or lost wages are usually not taxable, while punitive damages are typically taxable income.

Tax laws can be complicated, so the injured party should talk to a tax expert to understand the tax obligations related to their damages award.