Colorado personal injury cases often take a long time to resolve, and plaintiffs can be required to wait months or even years to be compensated for their damages. Learn about the role of pre- and post-judgment interest in a personal injury award.

Colorado Personal Injury Plaintiffs Are Entitled to Interest on Damages

Unfortunately, justice is not immediate. Colorado personal injury cases often take a long time to resolve, and plaintiffs are routinely required to wait months or even years to be compensated for their damages. What many injured people don’t realize is that they might also be entitled to the interest that accrued on their award while the claim was pending, or while it is on appeal.

On March 8, the Colorado Court of Appeals issued its opinion in White v. Estate of Soto-Lerma, finding that pre-judgment interest is part of an underlying claim against the decedent’s estate, is therefore subject to the insurance policy limits, and Colorado law bars an award on pre-judgment interest above the defendant’s policy limit.

What Are Pre- and Post-Judgment Interest?

Pre-judgment interest is awarded as compensation for “loss of the use of money” to the party who prevails in a lawsuit, from the time the lawsuit is filed until judgment is rendered. A plaintiff may be able to collect post-judgment interest after a court judgment is rendered up to the date the award is actually paid by the defendant.

Calculation of Pre- and Post-Judgment Interest

Colorado law allows injured persons to collect both pre-judgment and post-judgment interest. While the exact sum of pre- and post-judgment interest awards will vary, the court determines what they will be. Pre-judgment interest is intended to make an injured plaintiff whole again and is considered an award for the time value of money that would have accumulated on the money that was wrongly in the possession of the person who injured them.

Pre-judgment interest is not punitive, but instead is considered part of the compensatory damages, and begins to accrue from the date of the injury at a rate of 9 percent compounded annually. If the defendant appeals, the rate will be 2 percentage points above the discount rate certified by the Colorado Secretary of State on January 1 of the current year, compounded annually.

Why Pre-Judgment Interest Is Awarded

Pre-judgment interest is meant to fully compensate an injured person for his or her losses (the inability to use the money while the claim was pending, as well as the loss created by paying past debt with today’s inflated dollar), but it can also penalize the other party for extending settlement negotiations and therefore encourage injury cases to resolve more quickly.

Opponents of awarding pre-judgment interest say it puts the defendant in the unfair position of being assessed additional damages for exercising the right to have a court decide liability. They claim it results in a windfall for the plaintiff and an excessive penalty for the defendant, and say it does not remedy the problem of prolonged litigation because it gives the plaintiff a financial incentive to delay the case.

Purpose of Post-Judgment Interest

Even after a plaintiff wins a judgment, the award is often further delayed. Post-judgment interest begins to run from the date of the court judgment until the money is actually paid to the plaintiff — including the time when an appeal may be pending — and compensates the plaintiff at the rate of 2 percentage points above the discount rate certified by the Colorado Secretary of State on January 1 of the current year, compounded annually, pursuant to Colorado law.

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