In a California personal injury case, a plaintiff can seek various damages depending on the injuries they sustained and the effects those injuries are expected to have in the future. Common types of damages awards include those for lost wages, past medical expenses, and past pain and suffering. However, serious accidents often have lasting consequences on a plaintiff’s life, and, commonly, plaintiffs will suffer damages that occur well after the conclusion of the trial. In these cases, courts allow plaintiffs to seek future damages.
Types of future damages awards include amounts for lost future income, future medical expenses, and for any future pain and suffering. The award of future damages presents an interesting issue in that the future value of these damages award may not be equal to the present value of the same sum. This is because of the effect of compound interest. For example, if someone is promised $1,000 ten years from now, the present value of that $1,000 is less than $1,000.
The actual present value is the amount that, if invested today, will yield $1,000 in 10 years. Of course, this depends on the interest rate, but the effect can be significant. To illustrate the significance of this concept, the present value of $1,000 to be received in 10 years, at a discount rate of 5% is $614.