Economic damages can be difficult to understand for those that are not familiar with legal and financial terms and concepts. On a broad level, economic damages refer to a compensatory award made to a person or organization as a result of an economic loss caused by others. Economic damages can be found in any type of case where the actions or negligence of a person or organization lead to a victim losing money, property or the ability to make money in the future.
Within the category of economic damages exists several other types of damages. Gaining a comprehensive understanding of economic damages and how to calculate them requires knowing about the different kinds of awards available to a person or organization that has been harmed.
Personal Injury Damages
One of the most common kinds of economic damage calculations made for litigation cases involves personal injury damages. For example, if someone is hurt in a slip and fall accident that took place as a result of negligence on the part of the property owner, that person may be entitled to personal injury damages. Determining economic damages in this category depends on several factors, such as:
- Medical costs: In many personal injury cases, the victim will be required to seek hospitalization and attention from doctors. Personal injury damages cover the cost of medical attention, from ambulance rides to hospital stays and procedures like CAT scans, X-Rays, and so on. Damages compensation calculations for medical costs are can be fairly straightforward, such as adding the costs of all the relevant medical bills to reach a total amount that should be owed in damages. There are more complex cases, however, depending on the nature of the treatment and the extent of injuries.
- Loss of income: This type of damage is awarded if the victim is unable to work for a period of time due to their injuries. Loss of income damages cover more than the amount a person or organization actually lost. They can also be awarded to compensate for future income the victim will lose because of their inability to work.
- Property loss: If any property was damaged as a result of the actions or negligence of the defendant, the victim is entitled to damages for property loss. Damages compensation calculations for property loss can include vehicles, property, or even clothing or jewelry that a person was wearing at the time of their injury, to the extent they were damaged or destroyed.
All of these are types of damages may be awarded as a result of personal injury, but they can also happen if an accident occurs involving an organization. For example, if a company was renting out an office space and the pipes burst and damaged the company’s property due to negligence on the part of the property owner, that company might be entitled to property loss as well as loss of income damages, which is referred to as a business interruption claim.
Loss of Use Damages
Another common type of loss that may result in economic damages is loss of use. Loss of use damages refers to amounts owed to someone whose property, place of business, or equipment was damaged.
Loss of use damages may result from instances where an automobile was damaged and had to be replaced by the owner. Generally, loss of use damages are awarded to compensate the victim for the costs of replacing the damaged item.
For example, if someone had a vehicle that was damaged in an accident, they may be able to collect loss of use damages that would cover the cost of their rental car. In some cases, these damages are only awarded for a reasonable period of time that would normally be expected to pass before the victim was able to replace the lost property. This timeframe varies depending on the nature of the equipment and the situation that lead to it being damaged.
Caps on Damages
When calculating compensatory damage, it is important to remember that there may be a limit on how much money can be awarded for damages claims as a result of a personal injury. Most states have laws in place that limit the amount of damages a person can receive for damages like medical malpractice and wrongful death. These damages are often sought alongside the types of economic damages discussed above.
Determining Economic Damages
The determination of economic damages is unique to each case. Some cases are simple, while others require complex damage calculations. The role of financial investigation experts in litigation cases is not only to determine economic damages, but also to be prepared to testify in a deposition or at trial about his or her opinion on findings. Providing expert testimony requires possessing the knowledge and skills to explain the calculations in an understandable manner for non-financial listeners.
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Learn more about the types of damages that lead to economic damages. Contact Veriti Consulting LLC at info@veriticonsulting.com or call 855.232.4410 to speak with one of our service professionals.