Damages Not Related to Physical Personal Injury An individual who prevails in a personal injury claim for something other than a physical injury or sickness must include the amount of the award or settlement in gross income. In contrast, an award or a settlement for a physical personal injury or sickness can be excluded (except for punitive damages) from gross income. Should damages awarded for a physical personal injury or sickness be treated more favorably than damages awarded for emotional distress or other nonphysical personal injuries such as age and sex discrimination