The Direct and Indirect Financial Costs of Personal Injury
When an accident occurs and there is an injury, financial costs are not something on the minds of the victim and their families. The first priority is to seek help and stabilize the situation. Only later do the costs of a car accident, slip and fall or medical mistake come into focus.
For the average family, these costs can be crippling. While health insurance can help, medical costs alone can quickly eat up any savings and rob a person of his or her future physically, mentally and financially.
If the accident was caused by another party’s negligence, the victim, and sometimes family members, can pursue a claim for damages against the at-fault party, or defendant.
In most states, a plaintiff can pursue damages even if he or she was partially at-fault. Depending on the law of the state, any eventual award or settlement may be reduced by the proportion of fault. For example, if it’s determined a plaintiff’s actions were 25% responsible for the accident, his or her eventual award may be reduced by a corresponding amount. This is known as “comparative negligence.”
When calculating a dollar amount for properly compensating someone for their injuries, attorneys look at both the short- and long-term. While it’s tempting to take the first settlement offered by the defendant(s), injured victims should carefully evaluate what their current and future costs will be.
The costs for a personal injury can be broken down into two general categories: direct and indirect
Again, when an accident occurs, the injured victim and his family don’t give much thought as to the financial costs, especially in the long-term.
However, as time goes on, these costs become more and more apparent.
Direct costs are the most obvious since the family has to pay for many of these out of savings, or rely on extended family, friends and neighbors for help during these trying times. Until a settlement is reached with the at-fault party, the injured victim(s) often have to cover these expenses.
Direct expenses can include all medical care and any other tangible expenses related to treating the injury, managing symptoms or repairing damaged property. These can include:
- Doctor visits
- Hospital stays
- Any surgeries
- Rehabilitation and physical therapy
- Home/car modifications
- Travel expenses
- Other supplies
- Lost wages (current)
- Property damage
These are considered “direct” expenses since there is a definitive dollar amount attached to each item.
Indirect costs on the other hand are more complicated to figure out. These are future expenses or other losses that don’t have an exact dollar amount. Indirect costs account for the vast majority of costs in a personal injury case. Examples can include:
- Future lost wages
- Loss of consortium, or the impacts the injury has on spousal and family relationships
- Loss of enjoyment
- Emotional distress
- Pain and suffering
Put together, both direct and indirect costs are considered “compensatory damages,” or the financial costs of the accident. The intention is to make the plaintiff financially “whole” again in so far as that is possible.
In some cases though, a plaintiff may also receive “punitive damages” if it’s determined the defendant’s actions were willful or especially reckless.
In addition to compensatory damages, a plaintiff may be able to receive additional compensation if the defendant’s actions were blatantly reckless or intentional. Although the plaintiff receives this compensation, its real purpose is to punish the defendant for their actions. This amount varies on a case-by-case basis and is only awarded in the most extreme circumstances.
When evaluating the cost of your injury, it’s important to look at the long-term and factor indirect costs as well. Many plaintiffs make the mistake of just taking the first settlement offer thinking that will cover their expenses. They later find out it really isn’t enough to make them whole again, but by this time, it’s too late.
We invite you to search our directory to find an attorney in your area who can help navigate the post-injury claim process and obtain an adequate level of compensation for your injuries. While no amount of money can bring back lost time or heal pain, you shouldn’t have to shoulder the crushing financial burden of any injuries caused by someone else’s negligent actions.