Glossary35 terms, A to Z

Personal Injury Glossary: Settlement Terms Defined

The words that show up in a settlement offer, a demand letter, or a release, defined in plain English. Every guide on this site links the first mention of any term back here.

Bodily injury liabilityBodily injury liability (adjusters say "BI") is the coverage that pays other people's injury claims when the policyholder is at fault. It does not pay the policyholder's own injuries, which is what medical payments coverage or personal injury protection is for. The BI limit caps what the insurer will pay, so a serious injury can exceed the available coverage even when fault is clear. When that happens, the claim value is effectively bounded by the policy limit unless other coverage or assets are in play.

Collateral source ruleIn most states the collateral source rule lets an injured person recover the full provable amount of damages regardless of payments from sources unrelated to the defendant, such as health insurance, an employer, or PIP. The defendant gets no credit for those payments, and because it is an evidentiary rule the jury is generally not told that insurance paid the bills (source: millerandzois.com). The policy idea is that any windfall should go to the victim, not the wrongdoer. Roughly 38 states recognize some exceptions, and many have carved out medical malpractice, so the exact treatment varies by state (source: millerandzois.com).

Comparative negligenceComparative negligence reduces a claimant's recovery in proportion to their share of fault. If your damages are valued at $100,000 and you are found 20% at fault, the recovery drops to $80,000. States split this into pure comparative (you recover even at 99% fault) and modified comparative (you are barred at a 50% or 51% threshold) (source: justia.com). Which version applies controls how much fault you can carry and still collect, so it is one of the biggest levers on a settlement.

Contingency feeA contingency fee is the dominant payment model in US personal injury: the lawyer is paid a percentage of the recovery only if the case is won or settled, so the client generally pays no attorney fee if there is no recovery. A one third fee is common, the percentage varies between firms, and some offer a sliding scale based on how far along the case is when it settles (source: peoples-law.org). In an ordinary California injury claim the rate is negotiable rather than set by law, and the written contract has to say so (source: leginfo.legislature.ca.gov). Case costs such as filing fees, expert fees, and records are handled separately from the percentage, and you can owe court costs whether you win or lose (source: guides.sll.texas.gov). Whether the percentage is applied before or after those costs is the term that decides what you actually net, and the agreement must state it.

Contributory negligencePure contributory negligence is the strictest fault rule: a plaintiff who is even 1% at fault is completely barred from recovering anything. Only a few jurisdictions still apply it, namely Alabama, Maryland, North Carolina, Virginia, and Washington, D.C. (source: justia.com). The main escape valve is the "last clear chance" doctrine, which can still let a partly at-fault plaintiff recover if the defendant had the last clear chance to avoid the accident (source: kregerbrodish.com). In these states, contested fault can wipe out an otherwise strong claim.

Damage capA statutory ceiling on certain damages, most often non-economic damages in medical malpractice cases.Full guide

Demand letterA personal injury demand letter is sent to the insurer or other responsible party to start settlement negotiations. It describes the incident, explains why the other side is responsible, attaches medical documentation, and conveys a willingness to settle before filing suit (source: clio.com). Many lawyers lay out the itemized medical bills and economic losses first, then explain the defendant's negligence (source: millerandzois.com). It is often unwise to name a specific dollar figure at the very outset, so as not to cap the range too low, though demanding the policy limits is a common exception when the case warrants it.

Duty of careDuty of care is the legal obligation to act with reasonable care so as not to harm others, and it is the first of the four elements of negligence. The scope of the duty depends on the relationship: a driver owes other road users a duty to drive safely, and a property owner owes a duty that varies by the visitor's status. In premises cases an invitee (such as a store customer) is owed the highest duty including a duty to inspect, a licensee a lesser duty, and a trespasser generally little or no duty (source: gsjoneslaw.com). If no duty was owed, there is no negligence claim.

Economic damagesThe measurable out-of-pocket losses from an injury, such as medical bills, lost wages, and property damage.Full guide

Future medical expensesFuture medical expenses are the projected costs of all reasonable and necessary care the claimant will need after the case settles (source: notanaccident.com). For a lighter case an examiner may use a medical cost projection, while a severe or catastrophic case is documented in a life care plan (source: beaconrehab.com). An economist usually reduces the projected lifetime cost to present value, so the present-value figure and the raw lifetime total differ (source: plaintiffmagazine.com). These are economic damages and can be a large part of a serious claim.

General damagesAnother name for non-economic damages: subjective harms like pain, suffering, and loss of enjoyment of life.Full guide Life care planAn individualized projection of a catastrophically injured person's lifetime medical and care needs and their costs.Full guide

Loss of consortiumLoss of consortium is the loss of the intangible benefits of a relationship caused by a wrongful injury or killing, such as companionship, affection, household services, and shared activities (source: law.cornell.edu). It is a distinct claim brought by the uninjured spouse, not the injured victim, in recognition that a serious injury harms the whole family (source: corywatson.com). It does not cover lost wages, which are recovered separately as economic damages, and states restrict it heavily, often to spouses and sometimes parents or children. There is no fixed formula, so adjusters fold it into the broader pain and suffering evaluation (source: findlaw.com).

Lost earning capacityLost earning capacity is the reduced ability to earn a living going forward, separate from lost wages already incurred. It is a future loss, so it usually requires a vocational expert to assess what the person could have earned versus what they can earn after the injury, plus an economist to project and discount those earnings to present value (source: oasinc.org) (source: expertinstitute.com). The claim must rest on clear projections, not speculation, and insurers often argue the claimant can return to work. The discount rate the economist uses materially affects the final number.

Maximum medical improvementThe point where an injury has healed as much as it is going to, which is when the full scope of a claim becomes clear.Full guide Medical lienA legal right of a health payer or provider to be reimbursed out of your settlement, which reduces what you take home.Full guide

MICRAMICRA is California's Medical Injury Compensation Reform Act, which caps non-economic (pain and suffering) damages in medical malpractice cases. As amended by AB 35, the 2026 caps are $470,000 for a malpractice injury and $650,000 for malpractice resulting in wrongful death. The caps rise every January 1 (by $40,000 for injury and $50,000 for wrongful death) through 2033, reaching $750,000 and $1,000,000, then adjust 2% annually from 2034 (source: nolo.com) (statute: leginfo.legislature.ca.gov). MICRA caps only non-economic damages, so economic damages such as medical bills and lost wages are not limited. The old $250,000 cap still applies to cases filed before January 1, 2023.

Modified comparative negligenceModified comparative negligence reduces recovery by the claimant's percentage of fault, but only up to a bar threshold, after which recovery drops to zero. Under a 50% bar, a plaintiff is barred at 50% or more fault, so they must be 49% or less to recover. Under a 51% bar, a plaintiff barred only at 51% or more can still recover when exactly 50% at fault (source: justia.com) (source: law.cornell.edu). Over 30 states use some form of this rule, which makes the exact threshold a critical detail near the 50% mark.

Multiplier methodThe multiplier method estimates non-economic damages by multiplying a claimant's economic damages (mainly medical bills plus lost wages) by a factor, then adding the result back to reach a total. The factor is usually between 1.5 and 5 depending on severity, with minor injuries near 1.5 to 2 and catastrophic injuries at 4 to 5 or beyond (source: victimslawyer.com) (source: saclaw.org). For example, $60,000 in economic damages at a multiplier of 3 values pain and suffering at $180,000, for a $240,000 total (source: victimslawyer.com). The factor is a negotiation point, not a fixed legal rule, and the output is only an estimate.

NegligenceNegligence is the failure to use reasonable care that a reasonably careful person would use, and it is the legal basis for most personal injury claims. To win, the plaintiff must prove four elements: duty, breach of that duty, causation, and damages (source: justia.com). Car accidents, slip and falls, and most truck and pedestrian cases are built on negligence, though product liability and many dog bite cases use strict liability instead. If any of the four elements is missing, the claim fails.

No-fault insuranceIn a no-fault state, drivers carry personal injury protection (PIP) that pays their own medical bills and lost wages regardless of who caused the crash. To step outside no-fault and sue the at-fault driver for pain and suffering, the injured person must meet the state's serious-injury threshold, which can be a dollar amount of medical bills or a list of qualifying injuries (source: iii.org) (source: nolo.com). For example, Florida requires a permanent injury, significant scarring, or death (source: gouldcooksey.com). No-fault rules are why an identical injury can support a pain and suffering claim in one state but not another.

Non-economic damagesNon-economic damages, also called general damages, are the subjective harms an injury causes: physical pain, mental suffering, emotional distress, loss of enjoyment of life, and loss of consortium (source: nolo.com). Because there is no bill, they are estimated with the multiplier method (1.5 to 5 times economic damages) or the per diem method (a daily rate times days of suffering) (source: evenuplaw.com). In serious cases they can be the largest part of a settlement. A handful of states cap them, mainly in medical malpractice, while most do not cap them in ordinary injury cases.

Pain and sufferingPain and suffering is the non-economic damage covering both physical pain from an injury and mental distress such as anxiety, mental anguish, loss of enjoyment of life, and conditions like post-traumatic stress (source: nolo.com). It is most often estimated by multiplying economic damages by a factor of roughly 1.5 to 5, or by assigning a daily rate from the injury date until maximum recovery (source: findlaw.com). The output can be capped by the at-fault party's policy limits, for example a $50,000 calculation capped at a $25,000 policy. In no-fault states it is only available against the at-fault driver if the injury meets the state's threshold.

Per diem methodThe per diem method ("per day" in Latin) assigns a daily dollar value to pain and suffering and multiplies it by the number of days the claimant deals with the injury, usually from the injury date until maximum medical improvement (source: victimslawyer.com). Attorneys often base the daily rate on the claimant's actual daily earnings, with a reported practical range of roughly $100 to $500 per day. For example, a $200 daily rate over 365 days produces $73,000 in pain and suffering (source: victimslawyer.com). It works best for moderate injuries with a clear recovery window and poorly for permanent injuries, where the multiplier method captures ongoing impact better.

Personal injury protection (PIP)Personal injury protection (PIP) is first-party auto coverage that pays the policyholder's own medical bills and a portion of lost wages after a crash, regardless of fault. It is the core of every no-fault system: Florida requires at least $10,000 in PIP, and Massachusetts PIP commonly pays up to $8,000 (source: flsenate.gov) (source: malegislature.gov). PIP does not pay for pain and suffering, so to recover that the injured person must meet the state's serious-injury threshold and sue the at-fault driver (source: nolo.com). Some at-fault states offer PIP or MedPay as optional first-party coverage.

Premises liabilityPremises liability is the negligence theory that holds a property owner or occupier responsible for injuries caused by a dangerous condition on the property, most commonly a slip and fall. The injured person must show the owner owed a duty of care, that a dangerous condition existed, that the owner knew or should have known of it (actual or constructive notice), that the owner failed to fix or warn, and that this caused the injury (source: justia.com). The duty owed depends on whether the visitor was an invitee, a licensee, or a trespasser. The notice requirement is often the central fight, because the owner cannot be liable for a hazard they had no reasonable chance to discover.

Proximate causeProximate cause is the causation element of negligence: the plaintiff must connect the defendant's breach of duty to the actual injury claimed. It is not enough that the defendant was careless; that carelessness has to be what caused the harm. Insurers frequently attack causation by arguing a pre-existing condition or an unrelated event explains the symptoms, which is why objective medical evidence tying treatment to the accident matters so much (source: anthonypicillolaw.com). Without proven causation, even a clear breach of duty does not support recovery.

Pure comparative negligencePure comparative negligence lets a plaintiff recover even when mostly at fault, with the award simply reduced by the plaintiff's fault percentage and no bar. A plaintiff found 80% at fault on a $100,000 case still recovers $20,000 (source: justia.com). About a dozen states use it, including Alaska, Arizona, California, Kentucky, Mississippi, Missouri, New Mexico, Rhode Island, and Washington. The list shrinks: Louisiana adopted a 51% bar on January 1, 2026, and New York kept pure comparative for non-auto claims but added a 51% bar for motor-vehicle claims on May 26, 2026 (CPLR 1411(b)).

Settlement releaseThe document you sign to accept a settlement, which closes the claim and gives up the right to ask for more.Full guide Special damagesAnother name for economic damages: the documented, measurable losses like medical bills and lost wages.Full guide

Statute of limitationsThe statute of limitations is the filing deadline for a lawsuit. Miss it and the claim is barred no matter how strong, which is why it is the single most unforgiving rule in injury law. For ordinary personal injury it runs from 2 to 3 years in most states, for example 2 years in California and Texas and 3 years in New York (source: leginfo.legislature.ca.gov) (source: nycourts.gov). Medical malpractice, wrongful death, and claims against government bodies often have shorter deadlines. Florida cut its general negligence deadline from 4 years to 2 years in 2023 (source: flsenate.gov).

Strict liabilityStrict liability holds a defendant responsible without the plaintiff having to prove carelessness. In a strict-liability dog bite state, the owner is liable for a bite regardless of whether the dog ever showed vicious tendencies or the owner knew of any, and about 36 states have such statutes (source: animallaw.info). For defective products, most states apply strict liability so the plaintiff need only show the product was defective and the defect caused the injury during intended or foreseeable use (source: law.cornell.edu). States without a dog-bite statute instead use the "one bite rule," which requires showing the owner knew the dog was dangerous.

SubrogationSubrogation is the right of an insurer or other payer to step into the claimant's shoes and recover what it already paid out, usually by taking reimbursement from the settlement. When health insurance, Medicare, Medicaid, an ERISA plan, or workers' compensation covers accident-related treatment, that payer can assert a subrogation or lien right against the recovery (source: anthonypicillolaw.com). Like medical liens, some subrogation claims are negotiable while Medicare and ERISA claims are harder to reduce. Subrogation directly cuts into the net recovery, so it should be resolved before the settlement is disbursed.

Third-party claimA third-party claim is a claim made against the at-fault party's insurer rather than your own. In a standard at-fault state, the injured person pursues the negligent driver's bodily injury liability coverage, which is the classic third-party claim. The term also describes a separate path in workplace cases: an injured worker who is limited to no-fault workers' compensation against the employer can still bring a third-party negligence claim against a non-employer, such as an equipment maker or negligent contractor (source: nleelaw.com). Third-party claims are where pain and suffering damages are recovered, since first-party PIP does not cover them.

Wrongful deathA wrongful death claim is brought by surviving family members when a person is killed by another party's negligence or wrongful act. It compensates losses to the survivors, which can include lost financial support, lost companionship, and funeral costs, and it is distinct from any claim the injured person had before death. Wrongful death often carries its own filing deadline and its own damage rules: California's MICRA cap for malpractice wrongful death is $650,000 in 2026, separate from the injury cap (source: nolo.com). Some state damage caps that apply to injury cases do not apply to wrongful death, for example Ohio's non-economic cap (source: codes.ohio.gov). The wrongful death settlement calculator sets out the categories the statutes actually name.

Frequently asked questions

What is the difference between economic and non-economic damages?

Economic damages are the losses with a receipt: medical bills, lost income, property damage, future care costs. Non-economic damages cover what has no invoice, principally pain, suffering, and loss of enjoyment. Almost every valuation method on this site works by pricing the economic side first and deriving the non-economic side from it.

What is the difference between general and special damages?

They are the older names for the same split. Special damages are the documented out-of-pocket losses, matching economic damages. General damages are the subjective losses, matching non-economic damages. You will see both vocabularies in the same claim file, sometimes in the same letter.

What does a damage cap actually limit?

In nearly every state that has one, only the non-economic portion. Your medical bills and lost income are not capped, so a cap bites hardest on claims where the documented loss is small relative to the harm. Virginia is the notable exception, capping total damages in medical malpractice rather than the non-economic share alone.

What is maximum medical improvement?

The point at which your condition has stabilised and further treatment is not expected to improve it materially. It matters because it is the first moment anyone can price the claim honestly: before MMI, nobody knows what the permanent component is. Settling before reaching it means guessing at the part of the claim that is usually worth the most.

Why do some terms have their own page and others do not?

A term gets a page when there is genuinely an article to write, meaning sections, questions and cited sources. Eight terms qualified. The rest are defined here on this page, because a 96-word definition on its own URL is mostly site furniture and answers the question no better than the entry above.