Damages

What are damages?

Damages are the law's answer to a question it cannot really answer well. Once someone has been hurt, the injury cannot be undone, so the system substitutes money as the closest available remedy.

That substitution works reasonably for financial loss. A hospital bill has a number on it and a missed paycheck has a figure attached. It works far less cleanly for the parts of an injury that were never financial to begin with.

Understanding the categories matters because insurers evaluate them separately. An offer that looks reasonable against your medical bills may ignore future care or wage loss entirely.

What types of damages exist?

New Jersey recognizes several distinct categories, and most claims involve more than one.

• Economic damages, the documented financial losses
• Non-economic damages, covering pain, limitation and loss of enjoyment
• Punitive damages, awarded to punish rather than compensate
• Loss of consortium, belonging to the injured person's spouse
• Wrongful death and survival damages when someone dies

How are damages calculated?

Economic damages are built from records. Bills, wage statements, tax returns and expert projections of future cost produce a figure that can be defended line by line.

Non-economic damages have no such foundation. There is no formula a court requires, and negotiating shorthands like the multiplier method are tools rather than rules. What actually persuades is specific testimony about what changed in your daily life.

Both are then reduced by your share of fault under comparative negligence, which is why the fault percentage affects everything at once.

What limits apply to damages?

Several constraints can cap what is actually recoverable regardless of how the harm is valued. Policy limits are the most common, since a defendant's insurance often runs out before the losses do.

New Jersey's verbal threshold can bar pain and suffering claims after a car crash, and the Tort Claims Act imposes its own restrictions on claims against public entities.

Liens reduce what reaches you as well, which is why negotiating them down is part of the work rather than an afterthought.

Common questions

Are damages taxable?

Compensation for physical injury is generally not taxable as income under federal law, though interest and punitive awards are treated differently. Tax questions should go to an accountant rather than an attorney.

Can I recover damages for an injury that has not fully developed?

Yes. Future medical costs and future limitation are recoverable when supported by medical opinion, which is why settling before maximum medical improvement carries risk.

Who decides how much my damages are worth?

A jury decides at trial. Most cases settle, so in practice the figure comes from negotiation informed by what a jury would likely award on similar facts.

Are damages reduced if I had health insurance?

Not directly, since a defendant generally does not benefit from your having had coverage. What does affect your net recovery is that the insurer will assert a lien for what it paid, which is repaid from the settlement before funds reach you.