Personal Injury Damages – 10 Tips

Author: Brad Nakase, Attorney

Email  |  Call (888) 600-8654

Compensatory Damages in Personal Injury. In personal injury lawsuit and car accident injuries, the injured person recovers money damages that lawyers call “compensatory damages.” Compensatory damages include general damages and special damages. General damages in simple terms mean money for pain and suffering. Special damages are for medical bills, car repair, lost wages, etc.

Car accident lawyers refer to money damages under an umbrella term called “compensatory damages.” “Compensatory” damages include both “general” and “special” damages.

Compensable damages are categorized as either general or special. General damages are those damages that necessarily result from the act complained of.” (Licudine v. Cedars-Sinai Medical Center, 3 Cal. App. 5th 881, 891.)

Car accident injury compensatory damages are authorized under CA Civil Code §3333. “For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.” (Ca Civil § 3333)

“The measure of damages suffered by reason of a tortious act is the amount which will compensate for all the detriment proximately caused thereby whether it could have been anticipated or not. Civil Code § 3333. For such wrongs, damages will be awarded to the extent that the injured party will be restored to the position he would have occupied had the trespass not occurred.” (Cassinos v. Union Oil Co., 14 Cal. App. 4th 1770.)

1.  “General damages” In Car Accident Personal Injury

General Damages are those which necessarily result from the act complained of, and are implied by law to have thereby accrued to plaintiff. Special damages, on the other hand, are defined as damages which do not arise from the wrongful act itself, but depend on the circumstances peculiar to the infliction of each respective injury.

“General damages flow from the injuries received. Consequently, general damages are implied by law, and may be inferred from the nature of the injury itself. General damages include damages for pain and suffering, emotional distress, and other forms of detriment that are sometimes characterized as subjective or not directly quantifiable.” (Licudine v. Cedars-Sinai Medical Center, 3 Cal. App. 5th 881, 891.)

2.  “Special” or “Economic” Damages in Auto Accident Personal Injury

“By contrast, special damages do not necessarily arise from the typical infliction of the injury and are instead the out-of-pocket losses peculiar to the infliction of each respective injury. Special damages include medical and related expenses as well as lost income.” (Licudine v. Cedars-Sinai Medical Center, 3 Cal. App. 5th 881, 891.)

Many auto accident lawyers refer to special damages to include medical and related expense, loss of income, and the loss or cost of services. Special damages refer to out-of pocket losses that can be documented by bills, receipts, cancelled checks, and business and wage records. Special damages generally include medical and related expense, loss of income, and the loss or cost of services.

3.  “Economic damages” under Prop. 51

For Prop. 51 purposes joint and several liability for economic damages, “Proposition 51, Civil Code § 1431.1 et seq., provides in part that each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate judgment shall be rendered against that defendant for that amount. Civil Code § 1431.2.

Proposition 51 eliminates a third party defendant’s joint and several liability to an injured employee for unpaid noneconomic damages attributable to the fault of the employer, who is statutorily immune from suit. Proposition 51 retains the joint liability of all tortfeasors, regardless of their respective shares of fault, with respect to all objectively provable expenses and monetary losses. On the other hand, the more intangible and subjective categories of damage are limited by Proposition 51 to a rule of strict proportionate liability. (Scalice v. Performance Cleaning Sys., 50 Cal. App. 4th 221, 228.)

4.  Prejudgment interest on Personal Injury Damages

By statute, plaintiff may be entitled to prejudgment interest as part of his or her compensatory damages. (Bodell Const. Co. v. Trustees of Calif. State Univ. (1998) 62 Cal.App.4th 1508, 1525.)

Under Civil Code § 3291, an absolute right to 10% prejudgment interest on the compensatory damages portion of a personal injury award when a party rejected an offer of compromise under Civil Code § 998 settlement demand is exceeded by the judgment. (Ca Civil § 3291; Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 656-661.)

Civil Code section 3291 states:

In any action brought to recover damages for personal injury sustained by any person resulting from or occasioned by the tort of any other person, corporation, association, or partnership, whether by negligence or by willful intent of the other person, corporation, association, or partnership, and whether the injury was fatal or otherwise, it is lawful for the plaintiff in the complaint to claim interest on the damages alleged as provided in this section.


If the plaintiff makes an offer pursuant to Section 998 of the Code of Civil Procedure which the defendant does not accept prior to trial or within 30 days, whichever occurs first, and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff’s first offer pursuant to Section 998 of the Code of Civil Procedure which is exceeded by the judgment, and interest shall accrue until the satisfaction of judgment.


This section shall not apply to a public entity, or to a public employee for an act or omission within the scope of employment, and neither the public entity nor the public employee shall be liable, directly or indirectly, to any person for any interest imposed by this section.

5.  Income tax on Money from Received from Car Accident Injuries

According to the IRS, “If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income.” (www.irs.gov/pub/irs-pdf/p4345.pdf )

There are instances where auto accident money received is taxable. It depends on how your settlement is structured. The negotiation between you and the liable driver who injured you should include tax considerations so you can keep as much of your settlement as possible. Money damages awards and settlements, either by lump sum or payments, on account of personal physical injuries or physical sickness are not subject to federal or state income tax (i.e., physical injury compensatory recoveries are excluded from taxable income). (26 USCA § 104(a)(2); Ca Rev & Tax § 17131; also see 26 USCA § 104(a)(1)–workers’ comp benefits for “personal injuries or sickness” not taxable)

6.  Money Received for Physical injury Not Taxable

Generally, money received for car accident physical injuries are not taxable. Car accident insurance settlements are generally not taxable, although there are certain exceptions, according to the Internal Revenue Service (IRS).

If a personal injury lawsuit has components of a physical injury or physical sickness, all damages– other than punitive damages that originated from the physical injury are treated as payments received on “account of personal physical injuries or physical sickness.” It does not matter if recipient of the money is the injured party or not. Thus, compensatory damages for wrongful death or loss of consortium arising from a spouse’s physical injury or sickness, are not taxable. (H.R. Conf. Rep. 104- 737, 1996 U.S. Code Cong. & Admin. News 1677, § 5)

7.  Money Damages for Emotional Distress is Taxable With Exceptions

Money damages for emotional distress that did not arise from a physical injury or physical illness are taxable. However, there are tax deduction for medical care for emotional distress. (26 USCA § 104(a), last para.; Ca Rev & Tax § 17131; see H.R. Conf. Rep. 104-737, 1996 U.S. Code Cong. & Admin. News 1677, § 5 & fn. 56)

8.  Money Received as Prejudgment Interest on Damages are Taxable

Generally, prejudgment interest money received is consider “income” by the IRS, and therefore taxable. 26 USCA § 104. (Kovacs v. Commr. (1993) 100 TC 124, aff’d without opn. (6th Cir. 1994) 25 F.3d 1048) A injured victim may receive a tax-free settlement or judgment, but prejudgmentinterest and postjudgment interest is always taxable.

10.  Tax Deduction for Attorney Fees

If a car accident person received money, the person may deduct the attorney’s fee from the taxable money received. Therefore, it is import for car accident lawyer to inform the client that deduction for attorney’s fee on the taxable emotional distress of the money received. (See Srivastava v. Commr. (5th Cir. 2000) 220 F.3d 353, 356, 365-366 & fn. 3)

Please tell us your story:

0 + 5 = ?

See all blogs: Business | Corporate | Employment

Material Breach of Contract

A material breach of contract occurs when a party fail to perform a contract's terms making the primary purpose of the contract not met, the breach is considered material.

What Type of Business Is a Partnership?

A partnership is the simplest business structure where two or more people are owners of a business. The types of business partnerships include general partnership, limited partnership, and limited liability partnership.

What Is Company Culture?

A company culture is how things get done in the workplace. Company culture can more be described as core values or operating principles used to set the tone for the company's overall operations and success.

What is a sole proprietorship?

A sole proprietor is someone who owns an unincorporated business by himself or herself. A sole proprietorship is a business that can be owned and controlled by an individual.

Sole Proprietorship vs. LLC

Sole proprietorships are popular for self-employed professionals, freelancers, and contract workers, while LLC offers personal liability protection than sole proprietorship.

Is it legal to sell homemade food in California?

Yes, you can sell food from home so long as you have California-required health and food handling permits and business licenses. You must get a permit to sell food from home from the county health department in California. 

How to Incorporate a Small Business in California?

To incorporate a small business in California, file an Articles of Incorporation with the California Secretary of State's office. After you file the Article of Incorporation, create corporate bylaws, and elect your initial director(s).

6 Steps for Planning a Business Grand Opening

1. Create Goals for the Event, 2. Begin Planning Early, 3. Stick to the Budget, 4. Have the Right Insurance, 5. Advertise Before the Event, 6. Offer Food and Entertainment

10 Facts About Business Before Starting A Business

1) More than 50% of new businesses survive their first year in business. 2) Less than 50% of family-owned businesses are passed to their children. 3) 40% of business experience challenges in the supply chain…

S Corp vs C Corp – Differences and Benefits

The main difference between an S Corp and a C Corp is that for a C Corp, the corporate profit is taxed to the company, and the dividends to the shareholders are also taxed. In contrast, for an S Corp, the profit is taxed to the shareholder but not to the corporation. Generally, small businesses are S Corps, and major companies are C Corps, e.g., Apple, Microsoft, Caterpillar, John Deer, etc.

How to Form a Corporation in California?

To form a corporation in California follow these steps: 1) Write a one page Article of Incorporation, 2) File the Article of Incorporation with the California Secretary of State, 3) Elect corporate board of directors, 4) File Statement of Information with Secretary of State.

What are the benefits of a corporate lawyer?

The are many benefits of hiring a corporate lawyer for your business which includes: avoiding litigation, enforceable contracts, develop employee policies, proper licensing, etc.

What is Commercial Litigation?

Commercial litigation refers to litigation (lawsuit) that involves commercial or business disputes in court between two or more parties.

How to Get Rid of a 50 50 Business Partner.

How to Get Rid of a 50/50 Business Partner. One method to get rid of a 50/50 partner is to file a business partnership dissolution in the state your company was formed to end the partnership.

Personal Assistant Scam

A personal assistant scam typically involves a perpetrator putting out an ad to hire a personal assistant. Then, when the perpetrator purportedly hires the personal assistant, the assistant is asked to buy something with their own money with the promise to be repaid. The perpetuator then disappears after receiving the goods.

Fiduciary Responsibility Definition

A fiduciary responsibility refers to an organization that must put another person’s best interest first. A fiduciary duty is the highest standard of care in law. For example, a lawyer owes a fiduciary responsibility to the clients, a doctor owes a fiduciary duty to a patient, and a trustee owes a fiduciary duty to a beneficiary.

What is profit formula and how to calculate profit formula?

A business profit is revenue minus expenses. The profit formula in accounting calculates the net gains or losses incurred by the business for a period by subtracting the total expenses from the total income: Total Income – Total Expenses - Profit

What is invoice reconciliation?

Invoice reconciliation is the process of matching bank statements to incoming and outgoing invoices. The purpose of invoice reconciliation is to confirm that the data entry is correctly matched with every invoice.

What Makes a Verbal Contract Valid

A verbal contract is valid when contractual elements are satisfied, such as evidence of an offer, acceptance of the offer, and consideration which is an exchange of value between the parties.

Marketing Transport Company

The easiest way of growing your list of clients is to schedule a meeting with businesses that do a lot of shipping and introduce your transportation company. Then, engage an internet presence to market your transportation business.

What Can You Do with a Toxic Business Partner?

A bad partnership could lead to profit loss and toxic company culture. The first way of dealing with a toxic business partner is to schedule a meeting to discuss your concerns calmly.

Disruptive Business Model

Disruptive business models are disruptive innovations that bring new business ideas or technology to existing markets. A disruptive business does not fit the profile of a standard business model. Amazon is considered as one of the world's most disruptive companies.

How to Get a Business Loan with Bad Credit

For small business owners with bad credit, the easiest place to get a business loan is with the SBA. Although not easy, entrepreneurs with bad credit can get a small business loan.

How to Get a Small Business Grant

You can get a small business grant from the Small Business Administration. Also, check your local government for small business stimulus grants.

Pros and Cons of Etsy

Etsy Pro: Your products are given a large audience, and you easily sell your merchandise. Etsy Cons: You can only sell handmade or vintage merchandise, and there are many competitors.

What is a Breach of Contract in California?

A breach of contract in California arose when a party to a contract failed to achieve a legal duty the contract created. When a party to a contract fails to fulfill the terms of a binding contract, they are liable for damages for breaching the contract.

Business Equipment Leasing Pros and Cons

One advantage of equipment leasing is that you don’t need to come up with all the cash to buy the equipment. One disadvantage of equipment leasing is higher overall costs than outright purchasing the equipment.

LLC vs DBA

The main difference between an LLC and a DBA is that an LLC is a business entity, and a DBA is a registered fictitious business name. Sole proprietors, general partnerships, and LLC can register for a DBA.

See all blog: Business | Corporate | Employment

© Copyright | Nakase Law Firm (2019)