If you’ve filed a personal injury claim after suffering catastrophic injuries, you may be eligible for compensation from the negligent party that caused your injuries. Calculating that compensation can be difficult if your future cost of care or future lost wages need to be taken into consideration. This is where the concept of present value comes into play.
In order to understand the concept of present value of future losses, you first need to understand how compensation works for personal injury claims. The legal term for compensation is damages. In a typical personal injury case, damages are separated into economic and noneconomic categories.
Economic damages refer to the monetary expenses related to your injury. These can be calculated exactly and there is no limit to the types of claims that can be made or the amount a person can be awarded. The most common types of economic damages include loss of earning, loss of future earnings, medical expenses, cost of future medical care, costs associated with canceled plans, and household expenses.