You should receive compensation for your losses when you file a lawsuit for personal injury, medical malpractice, and other types of legal claims. In Alabama, all damages are classified as either economic or non-economic. Both types of compensation are intended to help you get back what you lost, but they do so in different ways.
The good news is that there are no caps on economic damages in Alabama. So, if you have medical bills, lost wages, or other financial losses as a result of an injury, you can get the full amount of these costs back.
However, pain and suffering damages are capped in some cases. Knowing the difference between these two types of damages may help you understand your rights and the options available to you.
What Are Economic Damages?
Economic damages are any form of compensation to which the court can assign a monetary value. These cover the financial loss you endured because of another party’s negligent or malicious actions. Some of the most common examples of economic damages in Alabama include:
- Property damage: Property damage is one of the most common types of economic damage. This is compensation you receive after someone or a business entity damages your property.
The amount rewarded is usually the value of the property damaged. The compensation covers vehicle repairs/replacements, home damage, and loss of personal items.
- Past, current, and future medical expenses: Injuries and illnesses from another party’s negligent actions are eligible for compensation. This compensation will cover hospital visits, surgeries, medication, and the like.
- Lost wages: This compensates you for the wages you missed while recuperating from injuries or handling legal issues. The courts award you based on what you should’ve earned had you not been injured.
- Loss of future earnings: This is almost similar to lost wages but, instead, compensates you for future income loss. It’s especially common in cases where the plaintiff suffers a debilitating injury, rendering them unable to return to work for good.
What Are Non-Economic Damages
According to AL Code § 6-5-544 (2023), non-economic damages are damages that you cannot quantify with a specific monetary value. These damages usually cover you for the hardships resulting from the accused’s negligence and misbehavior. They include:
- Pain and suffering: This is the physical and psychological turmoil you endured because of another person’s wrongdoing. There’s no fixed method for calculating pain and suffering, so courts either use the multiplier or per diem method to arrive at a reasonable compensation amount
. - Disfigurement and scarring: Scars and disfigurements from an accident can heavily weigh on the victim. Disfigurement and scarring compensates victims for the distress caused by the permanent physical changes.
- Mental anguish: This is the psychological impact you suffered due to an injury or illness that was no fault of your own. This includes stress, anxiety, fear, and trauma.
- Loss of consortium: This covers lost relationships stemming from your current state. For instance, an injury may prevent you from getting intimate with your partner, ultimately leading to the termination of your relationship. Loss of consortium compensates you for such losses.
What Are the Differences Between Economic and Non-Economic Damages?
The court may award you both economic and non-economic damages, depending on your case. The main differences between these two damages are:
Nature of the Compensation
As mentioned, economic damages refer to tangible damages that you can assign a specific financial value to. However, non-economic damages are more experiential and cannot be quantified using any measurable value.
The Burden of Proof
One of the biggest differences between non-economic and economic damages is the burden of proof. Proving economic damages is easier than proving non-economic damages. All you have to do is produce the necessary documentation, including:
- Medical bills
- Receipts
- Health insurance marketplace statements (Form 1095-A)
- Repair statements and invoice (property damage)
- Pay stubs
- W2 forms and
Non-economic damages, on the other hand, are harder to prove because you can’t quantify emotions. Instead of numbers and figures, proving them depends more on personal testimonies, expert opinions, and medical records from your psychiatrist. The abstract nature of most of the pieces of evidence makes proving non-economic damages very difficult.
Methods of Calculation
Calculating economic damages is as easy as summing the figures indicated on financial documentation like receipts, invoices, etc. Doing the same for non-economic damages is much harder and is usually determined by juries based on circumstances.
In some cases, the court may apply the multiplier method, which involves multiplying the economic damages by a fixed multiplier like 1.5 or 2.0. It may also use the per diem method, which pays the victim a fixed daily rate for each day of pain and anguish.
Taxability
Some types of economic damages are taxable under Alabama law. A good example is compensation for lost wages since the awards are essentially a replacement for your wages. Interest on judgments is also taxable, but medical expenses and settlements are tax-exempt.
Non-economic damages in Alabama are generally non-taxable, except for emotional distress damages with no physical injuries.
What About Punitive Damages?
As per AL Code § 6-11-20 (2023), the court may award punitive damages in cases where the accused shows gross negligence and intentional wrongdoing. However, there must be clear and convincing evidence that the defendant’s actions were grossly negligent or had malicious intent. Still, it’s worth noting that punitive damages are rarely awarded because it’s hard to meet the burden of proof in most cases.
Economics Vs. Non-Economic Damages Simplified
You may be entitled to economic damages, non-economic damages, or both based on the circumstances of your case. Now that you have a clear understanding of the two, you’ll be better placed to demand your rightful compensation.
While you’re not obligated to hire an attorney to help you file a claim or lawsuit, it’s always a good idea to hire a skilled and experienced legal professional to help you get the compensation you deserve. They may also arrange an out-of-court settlement and negotiate on your behalf if you want to sidestep the complexities of Alabama’s legal system.
