Why do two people with similar injuries walk away with vastly different settlements?
Often, the answer hinges on one issue… The method of calculating damages. Damages in a personal injury claim are not represented by a single figure. Instead they are categorized into two very distinct groups:
- Economic damages
- Non-economic damages
And knowing the difference can make or break your entire case.
Here’s the problem:
Few people know how this split works. They settle for a low offer or leave money on the table. That is a very expensive mistake.
Let’s break it all down.
Here’s what’s inside:
- What Are Economic Damages?
- What Are Non-Economic Damages?
- Why The Difference Matters So Much
- How Damages Are Actually Calculated
- Mistakes That Cost People Real Money
What Are Economic Damages?
Economic damages are the easy ones to prove…
Having receipts. Tangible, out-of-pocket expenses that you can calculate on a calculator. We refer to them as “hard numbers” in your case.
Economic damages usually include:
- Medical bills (past and future)
- Lost wages
- Reduced earning capacity
- Property damage
- Rehabilitation costs
- Prescription costs
- Home modifications for disability
Ok, pretty simple. Let’s say a defective product left you with $80,000 in medical expenses and $30,000 in lost wages. That’s $110,000 in economic damages. Easy peasy.
Here’s why having a product liability lawyer is important. A skilled product liability lawyer will identify every type of loss. Complex product cases require experienced injury attorneys who will ensure every receipt gets documented and every future expense is calculated accurately. You could be left thousands if you miss just one bill.
Recent data shows that median product liability trial awards have reached $748,000. Average trial awards exceed $7 million. So….there’s a lot of money at stake. And a large majority of it starts with accurately proving economic losses.
What Are Non-Economic Damages?
Now here’s where it gets interesting…
Non-economic damages are for injuries that don’t come with a price tag. There is no bill for a shattered life. They provide you with monetary relief for things you can’t easily place a dollar value on.
Non-economic damages typically cover:
- Pain and suffering
- Emotional distress
- Loss of enjoyment of life
- Disfigurement
- Loss of consortium (relationship damage)
- Mental anguish
Consider this scenario: A faulty medical device took away your ability to play with your children. How much is that worth? You can’t place a dollar amount on it. However, it is very real and something courts can award.
The challenge? Subjective damages like these are paid at the discretion of a jury. That’s also why they can vary wildly from case to case — and why they often comprise the majority of a settlement.
Why The Difference Matters So Much
Here’s the kicker…
Most states have a cap on non-economic damages only. They do not cap economic damages. That one little word can make a huge difference to your net payout.
For instance, some states have a maximum $250,000 damage award for pain and suffering — regardless of the severity of your injuries. However, you can still recover 100% of your medical bills and lost wages. Texas follows its own guidelines which alter the damage calculation.
Understanding these caps is huge because:
- It affects settlement negotiations
- It affects trial strategy
- It affects how much you actually walk away with
Product liability cases are no exception, in fact it matters even more. Product liability cases made up $13.7 billion dollars in verdicts in 2024, ranking it among one of the largest categories for nuclear verdicts.
How Damages Are Actually Calculated
Time to look at how these numbers come together…
Economic Damages Math
For economic damages, the process is fairly clean. A good attorney will:
- Collect every medical bill
- Add up all lost wages
- Get an expert to project future costs
- Document all property damage
- Total everything up
The figure doesn’t lie. There is no magic equation — just good old-fashioned addition.
Non-Economic Damages Math
Non-economic damages are another story. There are several typical approaches to calculating them:
Multiplier Method: Start with your economic damages, then multiply by a number between 1.5 and 5. The more serious the injury, the higher the multiplier. For example, if you come up with $100,000 in economic damages and you decide that your multiplier is 3, you would then add $300,000 in non-economic damages.
The Per Diem Method: Give your suffering a dollar amount per day and multiply it by the number of days you’ve suffered (or will suffer). This one is typically used for injuries that have a set recovery time.
Each one has its advantages and disadvantages. An effective lawyer understands which one to leverage based on the situation.
Mistakes That Cost People Real Money
Now for the part most people ignore…
Strong cases can weaken due to preventable errors. These are the largest you should look out for:
Not Documenting Everything
If it wasn’t written down, it didn’t happen. Doctor visits, missed days of work, prescriptions — write it all down. Otherwise, you’ll surely be leaving money on the table.
Accepting The First Offer
Insurance companies like to nickel and dime you. They’ll often start with an offer that only pays for your economic damages and excludes non-economic damages. By taking that offer, you’re tossing out the opportunity to collect large amounts of money.
Ignoring Future Costs
Injuries don’t magically heal once your case is over. Future medical procedures, ongoing treatment, long-term care – these all need to be anticipated and accounted for. Otherwise you could be leaving hundreds of thousands on the table.
Not Getting Expert Help
Product liability is complicated. No, seriously, it’s complicated. Let’s take the increase in product liability lawsuits as an example. Product liability filings reached 5,826 in 2022, more than DOUBLE the 3,342 that were filed back in 2013. That equals more competition, more legal defense maneuvers, and more reasons to have someone who specializes in winning on your side.
Bringing It All Together
Knowing the distinction between economic and non-economic damages isn’t trivial legal speak. It’s the basis of your entire case.
To quickly recap:
- Economic damages = the hard numbers (bills, wages, property)
- Non-economic damages = the human costs (pain, suffering, loss)
- Different states treat these differently — especially with caps
- Both types deserve attention and proper calculation
- Missing either category costs you money
Product liability litigation continues to grow in size and complexity. Accurate damage calculation is what separates a good settlement from a life-changing one.
Earn every penny of the claim—document, calculate and advocate for both categories.
