Texas Legal Glossary · Personal Injury

Economic Damages

Written and reviewed by Shane M. Boasberg, founder of SMB Law, PC · Licensed in Texas since 2003 · Updated October 2026

Definition: Economic damages are compensatory damages for actual, measurable financial loss, such as medical expenses, lost wages, loss of earning capacity, and property damage. Texas defines them in CPRC § 41.001(4), and the paid-or-incurred rule limits medical expenses to amounts actually paid or still owed.

Also called: special damages, pecuniary damages, actual damages

What economic damages mean in Texas

Economic damages are the dollars-and-cents losses an injury causes. CPRC § 41.001(4) defines them as compensatory damages intended to compensate a claimant for actual economic or pecuniary loss, and specifically excludes exemplary and noneconomic damages. In a Texas injury case they include past and future medical expenses, past lost wages, future loss of earning capacity, property damage, and out-of-pocket costs such as mileage to medical appointments and household help.

They are distinguished from noneconomic damages, which compensate for pain, mental anguish, and impairment that have no market price.

How it works in practice

Economic damages are proven with paper. Medical bills, explanation of benefits forms, pay stubs, tax returns, and repair estimates establish past losses. Future losses require expert testimony: a treating physician or life care planner projects future medical needs, and a vocational expert or economist translates reduced work capacity into a present dollar value.

Medical expenses carry a Texas-specific limit. Under CPRC § 41.0105, the paid-or-incurred rule restricts recovery to amounts actually paid or still owed by or on behalf of the claimant. If a hospital billed $40,000 but accepted $12,000 from health insurance as payment in full, the recoverable figure is $12,000 plus any unpaid balance, not the sticker price.

Why it matters in your case

Economic damages are the anchor of nearly every settlement negotiation. Adjusters and jurors treat documented bills and wages as the hardest numbers in the case and often size noneconomic damages in relation to them. A claim with $80,000 in medical bills is valued very differently from a claim with $8,000, even when the pain was similar. Complete, organized records of every dollar lost are the foundation of the claim.

Example

Hector, a self-employed electrician, is hit by a commercial van on Airport Boulevard and tears his rotator cuff. His economic damages include $62,000 in surgery and therapy bills after paid-or-incurred adjustments, $21,000 in lost income during recovery documented by prior-year invoices and tax returns, and a vocational economist’s projection of reduced earning capacity because he can no longer work overhead for long periods.

This entry explains Texas law in general terms and is not legal advice for any specific situation. Statutes and case law change; the date above reflects the last review.