What are the differences between economic and non-economic losses?

Published 31 Oct 2018

A serious injury or illness can have a significant impact on your finances. You may have to take time off work, pay for medical bills and cover a range of other out-of-pocket expenses while you are recovering.

However, what if someone else was responsible for your injuries? You could be entitled to compensation, even in circumstances where the incident was an accident. Under NSW liability laws, you can receive damages for any economic and non-economic losses you suffer due to an individual or organisation's negligence.

There are key differences between economic and non-economic losses, so let's examine them in more depth.

What are economic losses in public liability claims?

As the name suggests, compensation for economic losses covers the direct financial impact of your injuries - both in the past and for the future.

Successful claimants typically receive a lump sum payment for:

  • Medical and rehabilitation expenses.
  • Lost wages and superannuation.
  • Care requirements, including home modifications and mobility aids.
  • General out-of-pocket costs.

Past expenses are fairly easy to calculate, but estimating future losses can be challenging, particularly if your injuries are permanent or you are just starting your career.

Your legal team must assess how much care and medical support you may  need for the remainder of your life, as well as predict your likely career trajectory. The defendant's lawyers make their own forecasts, which typically aim to minimise the amount of compensation their client is liable to pay.

Judges use these calculations to inform their final decision, but do not have to select either.

What are non-economic losses in public liability claims?

Non-economic losses are sometimes referred to as general damages, and they comprise the less tangible elements of sustaining a serious injury or illness.

For example, how can a person's pain and suffering be quantified? Is there a way to measure a drop in a claimant's qualify of life since their injury? What psychological impact does disfigurement have on an individual? These are all questions the courts must answer when faced with a public liability claim.

A judge must weigh up various factors, such as the effect of an injury on your mental wellbeing, social life and ability to participate in hobbies and other activities that you previously enjoyed.

Not all claimants are entitled to general damages. You must have sustained injuries that are at least 15 per cent as severe as a most extreme case, such as quadriplegia. The maximum payout for non-economic losses is currently $350,000 under the Civil Liability Act 2002.

Are you entitled to compensation for your injuries?

Receiving a judge's decision in your favour isn't the final hurdle in a public liability claim. Your lawyers must also convince the court of how seriously your injuries will affect you financially and in other areas of your life.

To ensure you receive the maximum amount of compensation possible, please contact a public liability claims expert at Gerard Malouf & Partners Compensation, Medical Negligence & Will Dispute Lawyers today.