The discount rate is a percentage used to calculate the present value of future damages in a personal injury case. It accounts for the time value of money, recognizing that a lump-sum award today can be invested and grow over time. Courts and attorneys use the discount rate to determine how much a defendant should pay now to cover the plaintiff's future losses, such as medical expenses, lost earnings, or long-term care.
If a plaintiff is awarded $500,000 for future medical care over 10 years, the discount rate might reduce the lump-sum payment to a present value of $400,000. The difference reflects the ability to invest the award and earn interest over time.
Determining the appropriate discount rate often involves expert testimony from economists or financial professionals. A personal injury attorney ensures future damages are fairly calculated, protecting the plaintiff’s long-term financial needs.
