Economic vs. non-economic: What's the difference?
Published 29 Oct 2018
When a person sustains injuries as a result of someone else's negligent behaviour, their ability to work and live can be compromised to a significant degree. This may result in high medical and treatment costs, as well as other out-of-pocket expenses.
In NSW, under the Civil Liability Act 2002, those in this position may be entitled to compensation to cover both economic and non-economic losses.
But what's the difference between these two damages?
The Civil Liability Act 2002: An overview
In NSW, the common law of negligence is held under the Civil Liability Act 2002. In order to establish negligence, the plaintiff must prove that the defendant:
- Owed the plaintiff a duty of care.
- Breached that duty of care.
- Significant injury was caused as a result.
On top of this, the court must determine whether:
- The risk was foreseeable.
- The risk was not insignificant.
- A reasonable person in the same position would have taken the same precautions.
Once established, the court will then consider the damages for economic and non-economic losses.
What are economic losses?
The term 'economic loss' refers to the financial impact of a person's injuries - both in the past and future.
Successful claimants may receive compensation for:
- Lost earnings.
- Medical and treatment expenses,
- Other out-of-pocket expenses.
When calculating total rewards for past expenses, a court must consider various medical receipts and invoices. However, it's a lot trickier to calculate future economic loss. This is because a legal team on both the plaintiff's and defendant's side will have to accurately predict how much financial support and care will be required for the future. A judge will then consider both submissions.
What are non-economic losses?
Calculating non-economic losses are a lot harder as they are damages that are unquantifiable - they cannot be added up using receipts and medical bills. They refer to:
- Pain and suffering.
- Emotional distress.
- Loss of expectation of life and disfigurement.
Damages for non-economic loss are not awarded unless the severity of the non-economic loss stands at 15 per cent.
Within the Act, damages for non-economic loss are determined in accordance with a table that compares a person's injuries against that of a most extreme case. A person is then awarded a sum based on a proportion of the maximum amount.
The maximum amount of damages for such costs is $350,000, but this is only rewarded in the most extreme cases.
If you've sustained injuries as a result of someone else's negligent behaviour, you may be eligible for compensation. Get in touch with the team at Malouf Solicitors today to see how we can help.
Please call us on 02 8833 2000 to speak with a lawyer
I remain extremely grateful for Maloufs legal representation related to my financial management of the estate of my brother and for your continuing help and advice in this matter. As an aside, I always recommend Maloufs to my friends and family members who are seeking the best legal representation - only last week, I strongly advised a close family friend that their best interests would be served by arranging an appointment at your Parramatta offices.
John of Parramatta NSW