Understanding the Difference Between Economic and Non-Economic Damages

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By Seva Law Firm

After an accident, most people focus on the physical pain and medical bills. But when it comes to seeking compensation through a personal injury claim in Michigan, it’s important to understand what you’re truly entitled to. There are two main categories of damages: economic and non-economic. Each plays a critical role in determining the value of your case. If you’re recovering from an injury in Detroit, understanding how these damages work could significantly impact your outcome.

What economic damages actually cover

Economic damages are the straightforward costs you can calculate. These include expenses you’ve already paid and money you’re likely to lose in the future because of your injury. They’re considered measurable and usually backed by receipts, pay stubs, or medical records. In most Detroit-area personal injury claims, economic damages form the foundation of a compensation demand.

The most common examples include:

  • Medical expenses – hospital stays, emergency room visits, surgery, physical therapy, and medication

  • Future medical care – treatment expected to continue beyond the settlement or trial

  • Lost wages – income you missed while recovering or attending doctor appointments

  • Loss of future earning capacity – reduced ability to work or return to your previous job

  • Out-of-pocket costs – transportation to medical appointments, home health care, or assistive devices

These losses are often easier to prove, but they still require detailed documentation. Insurance companies will scrutinize each claim, especially future costs. An experienced personal injury lawyer in Detroit can work with medical experts and economists to present accurate projections that support your case.

How non-economic damages come into play

Non-economic damages are different. They don’t come with invoices or receipts. Instead, they represent the intangible impact the injury has had on your life. That includes your pain, mental suffering, and any long-term change to your daily routine.

Here are examples of what these damages might involve:

  • Physical pain – from the initial injury or chronic pain that lingers after treatment

  • Emotional distress – anxiety, depression, sleep issues, or post-traumatic stress

  • Loss of enjoyment of life – being unable to participate in activities you once enjoyed

  • Loss of companionship or consortium – how your injury affects relationships with a spouse or family

  • Disfigurement or physical impairment – visible scars or loss of function in a limb or organ

Because these damages are subjective, they are harder to quantify. Insurance adjusters and juries must consider medical evidence, your personal testimony, and expert opinions to arrive at a fair number. What matters most is how the injury changed your life—not just what it cost.

How Michigan handles both types of damages

In Michigan, injury cases often begin with your own no-fault insurance, especially after car accidents. This covers certain economic damages like medical bills and lost wages, regardless of fault. However, it does not allow you to recover non-economic damages unless your case meets a specific legal threshold.

To seek pain and suffering compensation in a Michigan car accident case, your injury must result in:

  • Death

  • Permanent serious disfigurement

  • Serious impairment of body function

If your case qualifies, you may file a third-party lawsuit against the at-fault driver and pursue both economic and non-economic damages. For other personal injury claims—like slip and fall accidents, product liability, or medical malpractice—this threshold does not apply, but you still must prove the defendant was negligent.

How attorneys calculate compensation in Detroit cases

There’s no one-size-fits-all formula for these damages. Lawyers use several tools and approaches to estimate their value:

  • Multiplier method – multiplying your total economic damages by a number (typically between 1.5 and 5) based on the severity of the injury

  • Per diem method – assigning a daily dollar value to your pain and multiplying it by the number of days you’ve suffered

  • Expert input – bringing in vocational experts, medical professionals, or psychologists to explain how your injury affects your future

Local knowledge also matters. Detroit juries may be more or less conservative than other parts of Michigan, so an attorney’s courtroom experience helps them value your case more accurately during negotiations.

Why documenting non-economic losses matters

You may feel like it’s hard—or even uncomfortable—to describe your emotional suffering. But to recover fair compensation, you’ll need to show how the injury affected your quality of life. That might include:

  • Personal journals or notes describing your pain and daily limitations

  • Testimony from friends and family about changes in your mood, mobility, or personality

  • Photos or videos showing your life before and after the accident

  • Medical records that include mental health evaluations or referrals

The more clearly you present the full impact of the injury, the more likely you are to receive compensation that reflects your real experience—not just your medical bills.

Limits on damages in Michigan

Michigan law does not cap non-economic damages in general personal injury cases. However, exceptions exist in specific types of claims.

In medical malpractice lawsuits, for example, non-economic damages are capped. As of 2025, the general cap is around $537,000, but it can rise to about $960,000 if the injury involves permanent loss of a vital bodily function or brain damage.

There’s also a time limit—called the statute of limitations—for bringing your claim. In most cases, you have three years from the date of the injury. Failing to act in time could bar you from recovering any damages, no matter how strong your case.

Why legal guidance helps balance both sides of your claim

Getting compensated for financial losses is one thing. But making sure your pain, disruption, and long-term harm are properly acknowledged is another. Insurance companies often focus on the easy-to-calculate numbers. They may downplay the harder-to-prove elements that affect your mental and emotional well-being.

An experienced Detroit personal injury lawyer knows how to prepare both sides of your case. They will gather the medical records, hire experts, and prepare witnesses to support your economic damages. At the same time, they’ll help you present your non-economic damages in a clear, compelling way that humanizes your story.

Conclusion

Understanding the difference between economic and non-economic damages isn’t just legal jargon. It’s about recognizing how an injury affects every part of your life—and making sure that every part is considered in your claim. If you’re dealing with the aftermath of an accident in Detroit, talk to a personal injury attorney as soon as possible. A well-prepared case gives you the best chance at getting the full compensation you deserve.