Prejudgment interest is interest added to a damages award for the period before judgment, usually running from the date of injury, the filing of the lawsuit, or a demand, until the verdict or judgment. Whether it is available in injury cases, on which damages, and at what rate, is set by each state's law.
Origin
Courts historically awarded interest mainly on fixed sums such as debts, and were reluctant to add it to injury damages that juries set. Over the twentieth century many states adopted statutes allowing prejudgment interest in personal injury cases, often to compensate for delay and to encourage settlement.
Significance in Asbestos Context
Asbestos cases can take months or years from filing to verdict, and prejudgment interest can add a meaningful amount to a judgment where it is allowed. States differ widely: some allow it on all compensatory damages, some only on past economic losses, some exclude future damages or punitive damages, and some do not allow it in personal injury cases at all. Some states tie it to settlement offers, allowing extra interest when a defendant rejects a reasonable offer and does worse at trial. Rates may be fixed by statute or linked to market rates, and the start date varies. Federal maritime law has its own approach, and courts there have discretion. Prejudgment interest is different from post-judgment interest, which runs on an unpaid judgment after it is entered, and it does not apply to bankruptcy trust payments, which follow the trust's own procedures. It is one of the factors that can affect how both sides value a case for settlement.
Example Sentence
Under the state statute, the judge added prejudgment interest on the past medical expenses from the date the lawsuit was filed.
Related Terms
Compensatory Damages, Economic Damages, Damages, Punitive Damages, Remittitur, Trial Preference
Notes
- Ask your lawyer whether your state allows prejudgment interest and how it might affect settlement talks.
- Keep dated records of medical bills and lost wages; some interest rules depend on when losses happened.
Category: Legal Damages & Remedies · All Lexicon terms A–Z
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