How is emotional distress regarded in terms of insurance claims?

Emotional distress is regarded as a non-economic damage in terms of insurance claims. This classification is significant because non-economic damages refer to compensation for intangible losses that do not have a specific monetary value. Unlike economic damages, which cover direct financial losses such as medical bills or lost wages, non-economic damages recognize the psychological impact of an event, including pain, suffering, or emotional turmoil.

This distinction is critical in insurance and legal contexts where the calculation of damages might vary significantly based on the nature of the claim. Non-economic damages like emotional distress aim to provide restitution for the pain and suffering endured by an individual rather than compensating for out-of-pocket expenses. Understanding this classification helps adjusters appropriately assess claims that involve emotional and psychological harm.