COMPENSATORY DAMAGES – LAW 101
Hello, I’m attorney Kyle Bachus. The legal world is full of overly complicated jargon and terminology that can be intimidating if you don’t know what it means. In my law 101 video series, I’m breaking down some commonly used legal terms so you can be informed and confident should you ever need to take legal action.
In this episode of law 101, we’re going to break down the legal term damages.
In other videos, we talked about torts, and we talked about the tort of negligence. And if somebody acts unreasonably towards you, and they cause harm to you, those harms that are caused are what the definition of damages means. Damages are harms and losses and injuries that result legally as a consequence of somebody else’s conduct, their negligence. We have different categories of damages under the law.
One of our categories of damages is called economic losses or economic damages. And these are lost wages, medical expenses, out of pocket expenses, co-pays, deductibles, any over-the-counter expenses that you might have, any future wage loss and any loss of future earning capacity. All of these are economic damages. It’s like you could come up with a bill for them, you could actually demonstrate them, and they’re very tangible.
The second category of damages is called non-economic damages. So we have economic damages, these tangible damages we just discussed, and then non-economic damages. These are the more amorphous type of damages. Non-economic damages are pain, suffering, loss of enjoyment of life, physical impairment, disfigurement. These are damages that you can’t go look up a price for, right?
But in every state, you’re entitled to recover both economic damages and non-economic damages. Now you might have heard in some states that they have caps on damages. Caps on damages are where the legislature comes in and says, we’re going to put a top or a ceiling on the maximum amount that you can recover for one or more categories of damages.
Most states, if there is a cap on damage, the cap on damage only applies to the non-economic damages. The pain, suffering, loss of enjoyment of life. Which is interesting from our perspective, because in many cases, the wage loss, those things, although real, the more catastrophic damage to a person is the suffering that they have to endure. But the legislators and many states have adopted these caps on damages. In Colorado, we have a cap on non-economic damages that’s a little over half a million dollars is the maximum that you can recover for non-economic damages. But interestingly, our legislature put no cap on two components, physical impairment and disfigurement. No cap on physical impairment, no cap on disfigurement.
So when we’re analyzing for our clients, non-economic damages, we want to make sure that we characterize and locate the physical impairment and disfigurement damages, because those aren’t capped in serious cases. Both categories of damages that we have just talked about, the economic damages and the non-economic damages, those damages are designed to compensate the injured person. They’re not to be a profit center for the injured person. They’re supposed to bring the injured person back to Ground Zero.
All of these damages are what we call compensatory damages. If you have a question about damages that you sustained as a result of somebody else’s conduct, if you believe that they acted unreasonably and have caused you to incur damages, and you have questions about those damages, we’re happy to talk with you personally about that at Bachus & Schanker. To learn more about other law topics that can help you feel informed and confident about the law, make sure to check out more videos in this series.
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FAQ – COMPENSATORY DAMAGES
WHAT IS THE DEFINITION OF COMPENSATORY DAMAGES?
After an accident, victims often suffer financial hardships and physical and emotional injuries. If the accident was a result of another person’s negligence, you may be able to take legal action and claim compensation for these losses. The injuries and losses you sustain after an accident are legally referred to as compensatory damages. These types of damages are also called “actual damages.”
WHAT IS THE PURPOSE OF COMPENSATORY DAMAGES?
Claiming compensation for damages is meant to replace what was lost due to an accident—not for the personal injury victim to make a profit. They reflect all the ways in which a victim has suffered, including financially, physically, and mentally. Monetary awards for these damages are designed to compensate the plaintiff and return them to their pre-accident status.
ARE THERE DIFFERENT TYPES OF COMPENSATORY DAMAGES?
There are two main categories of actual damages that result from negligence: economic damages and non-economic damages. Economic damages represent the more tangible expenses a victim sustains after an accident. Non-economic damages reflect how a victim has suffered apart from financial burdens. While they may be more challenging to calculate, that doesn’t make them any less real.
WHAT ARE EXAMPLES OF ECONOMIC DAMAGES?
Economic damages are actual expenses and financial hardships caused by an accident. Some examples include:
- Medical bills
- Co-pays and deductibles
- Future medical expenses
- Lost wages
- Loss of future earning capacity
- Property damage expenses
- Other out-of-pocket expenses
WHAT ARE EXAMPLES OF NON-ECONOMIC DAMAGES?
Accident victims often sustain injuries that are not so apparent right away. Economic damages are damages awarded for non-tangible losses, such as:
- Pain and suffering
- Emotional distress
- Loss of consortium
- Loss of opportunity
- Loss of enjoyment of life
While these types of damages don’t have a specific price tag, they’re often how accident victims suffer the most.
IS THERE A CAP ON THE AMOUNT YOU CAN RECOVER FOR DAMAGES?
Except for medical malpractice, there is no maximum set on economic damages you can recover by filing a lawsuit in Colorado. However, there is generally a cap on non-economic damages in most states. According to Colorado Revised Statute 13-21-102.5, non-economic damages cannot exceed $500,000.
However, the Colorado Legislature did not apply a cap on two types of non-economic damages:
- Physical impairment
By excluding disfigurement and physical impairment from caps, victims of these permanent injuries can claim the full value of their suffering and its impact on their lives.
ARE COMPENSATORY DAMAGES DIFFERENT THAN PUNITIVE DAMAGES?
Compensatory and punitive damages have different purposes in the civil court system. While compensatory damages are meant to pay victims for their losses, punitive damages are designed for punishing the defendant for egregious or particularly harmful behavior.
When a defendant acts with malicious intent and causes an accident, the court may decide to include punitive damages as a way to make an example of the defendant and deter that person from repeating those actions. This is why punitive damages are also called “exemplary damages.”
HOW DO I KNOW I QUALIFY TO CLAIM DAMAGES AFTER AN ACCIDENT?
When you suffer injuries and losses because of another person’s negligence or careless actions, you may qualify to bring a personal injury claim for compensation. Victims have rights and deserve justice after being hurt in an accident. Consider legal representation to help you get the maximum amount for your damages and to ensure you’re treated fairly by the insurance companies and legal system.
DO I HAVE TO GO TO TRIAL TO RECOVER DAMAGES?
Most personal injury victims do not need a judge or jury to resolve their claims. The majority of these cases will resolve with a settlement that fairly reflects the victims’ losses. However, it’s essential to work with an experienced injury attorney who knows what damages to include in your lawsuit and can ensure you’re claiming the full value of your losses. The stronger your case, the more likely you will not have to go to trial.