Indiana: Prejudgment Interest Rules

The short answer

Indiana doesn't use one prejudgment-interest rule -- it uses two, and they
don't overlap. A tort claim (including a personal-injury, wrongful-death, or
even an underinsured-motorist insurance dispute, since Indiana courts treat
those as "arising out of tortious conduct") goes through the Tort Prejudgment
Interest Statute, a genuinely unusual design: interest isn't available at all
unless the plaintiff made a proper written settlement offer that the
defendant didn't match. A contract or ordinary debt claim isn't covered by
that statute at all; it instead falls under a separate, older interest-rate
law that pays a flat 8% once the amount owed is shown to be definite. Neither
track reaches the State of Indiana or a city, county, or other political
subdivision in a tort case -- that liability is barred outright, not just
capped.

Requirements one by one

Governing law

Tort claims are governed by IC 34-51-4, generally called the Tort
Prejudgment Interest Statute (TPIS), enacted in 1988. By its own terms it
"applies to any civil action arising out of tortious conduct" -- nothing
more, nothing less. Contract and ordinary debt claims sit entirely outside
this chapter; they're instead governed by IC 24-4.6-1-102 and -103, part of
Indiana's general interest-rate law, layered with a common-law requirement
(applied in cases like Lash v. Kreigh, 2023) that the damages be
ascertainable from the parties' own agreement before any interest can be
awarded at all.

Interest rate

For a tort claim, the court picks a simple annual rate somewhere between 6%
and 10% -- the statute gives no default, just the outer bounds (IC
34-51-4-9). For a contract or debt claim, the rate is a flat 8% a year: IC
24-4.6-1-102 sets that rate for loans or forbearances of money where the
parties never agreed on a rate, and IC 24-4.6-1-103 sets the same 8% for a
written instrument that doesn't specify its own rate, or for an account
stated or closed. If the parties' own contract fixes a different rate,
that contract rate controls instead.

When interest starts running

Tort claims have no fixed start date -- the court sets the accrual period
itself, but two hard limits apply: the total period can never exceed 48
months, and it can't begin before the LATEST of three triggers: 15 months
after the cause of action accrued, 6 months after the claim was filed, or
(for a medical malpractice claim) 180 days after a medical review panel
forms to review it. The court must also exclude any delay it finds was
caused by the party asking for the interest. Contract and debt claims run
from a specific date instead: the date of settlement on a written
instrument with no stated rate, or the date an itemized bill was sent and
payment demanded on an account stated or closed.

Contract vs. tort claims

These aren't variations on a shared rule -- they're two disconnected legal
regimes. Tort prejudgment interest is conditioned entirely on a settlement-
offer exchange: the plaintiff must make a timely, qualifying written
settlement offer, and the defendant must fail to make its own qualifying
offer, or the whole chapter simply "does not apply." A contract or debt
claim carries no such precondition; instead, the gate is whether the amount
owed is ascertainable or calculable from the parties' own agreement, without
requiring the court to exercise discretion to fashion a number.

Mandatory or discretionary

For an eligible tort claim, an award is fully discretionary -- a trial court
can decide the amount, the rate, and the time period, and can deny the
request outright without even explaining why. But that discretion only
kicks in once the statute's settlement-offer conditions are satisfied; if the
defendant made a timely, sufficient offer, the statute doesn't apply at all,
and there's no discretion to exercise in the plaintiff's favor. For a
contract or debt claim, interest becomes available once the amount owed is
shown to be genuinely ascertainable from the agreement -- courts have denied
it where fixing the number still required real judgment calls (like
resolving a dispute over deficient work under a quantum meruit theory).

Simple or compound

Both tracks use simple interest. IC 34-51-4-9 requires the court to compute
tort prejudgment interest "at the simple rate of interest," and the
contract/debt statute, IC 24-4.6-1-103, likewise describes only a flat
annual percentage with no compounding mechanism.

Claims against the government

A tort claim against the State of Indiana or a political subdivision (a
county, city, town, school corporation, and similar entities) cannot recover
prejudgment interest at all under IC 34-51-4-4 -- a flat exclusion, not a
lower rate or a discretionary denial. The contract/debt interest statute, IC
24-4.6-1, doesn't contain an equivalent carve-out for a government defendant
in a contract or debt claim.

Other exceptions

No part of a judgment awarded as punitive damages ever draws prejudgment
interest, tort or otherwise (IC 34-51-4-3). The settlement-offer mechanism
cuts both ways and can eliminate a tort plaintiff's interest claim entirely,
regardless of how strong the underlying case is, if the defendant's own
timely offer met the statute's two-thirds threshold. A medical-malpractice
claim gets its own later accrual trigger tied to when a medical review panel
convenes, reflecting that those claims often can't even be filed in court
until the panel process concludes.

What trips people up

The settlement-offer precondition is the single biggest surprise in
Indiana's tort statute. Most states either grant courts open-ended
discretion to award tort prejudgment interest or bar it outright; Indiana
instead makes the whole chapter conditional on a specific procedural
exchange of written offers within specific deadlines (nine months for the
defendant, one year for the plaintiff). Miss those deadlines or the offer's
formal requirements, and prejudgment interest may never even become
available for the court to consider.

The Indiana Supreme Court has confirmed the TPIS reaches further than the
phrase "tort" suggests: a claim against your own uninsured or underinsured
motorist carrier counts as "arising out of tortious conduct" for these
purposes, even though you're suing your insurer under a policy, not the
at-fault driver directly -- and the interest awarded there can exceed the
policy's own coverage limits, because it's treated as a collateral
litigation expense rather than part of the underlying damages.

Don't assume a contract claim automatically earns interest just because
you can point to an unpaid invoice. Indiana courts still require the amount
to be ascertainable from the contract itself, not from a calculation the
court has to exercise judgment to construct -- a contractor who wins on a
quantum meruit theory because there was no enforceable price term, for
example, is not automatically entitled to prejudgment interest just because
the final number turned out to be simple to compute.

Common questions

Can I get prejudgment interest on a personal injury claim in Indiana?
Only if you made a proper written settlement offer within the statutory
deadlines and the defendant didn't make a qualifying offer of its own. If
either of those conditions isn't met, the Tort Prejudgment Interest Statute
doesn't apply at all, and a court has no discretion to award it.

What interest rate applies to an unpaid Indiana contract or invoice?
A flat 8% a year under IC 24-4.6-1-102 or -103, unless the contract itself
fixes a different rate. This is a separate statute from the tort rate (6% to
10%, court's choice) — contract claims aren't covered by the tort statute at
all.

Can I collect prejudgment interest from the State of Indiana or my city
for a tort claim?
No. IC 34-51-4-4 bars prejudgment interest liability against the state or
any political subdivision entirely for a claim under this chapter.

Does Indiana prejudgment interest compound?
No. Both the tort rate and the contract/debt rate are simple interest,
calculated as a flat annual percentage with no compounding.

Statutes and sources

• IC 34-51-4-1 -- "This chapter applies to any civil action arising out of
  tortious conduct." Accessed 2026-07-05:
  https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-3 -- "This chapter does not impose liability for prejudgment
  interest on any part of a judgment that is awarded as punitive damages."
  Accessed 2026-07-05: https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-4 -- "This chapter does not impose liability for prejudgment
  interest on the state or any political subdivision (as those terms are
  defined in IC 34-6-2.1-193 and IC 34-6-2.1-155)." Accessed 2026-07-05:
  https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-5 -- the defendant's timely-offer exclusion, quoted in full
  above. Accessed 2026-07-05: https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-6 -- the plaintiff's timely-offer requirement, quoted in full
  above. Accessed 2026-07-05: https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-8 -- the accrual-period rules, quoted in full above. Accessed
  2026-07-05: https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 34-51-4-9 -- "The court shall compute the prejudgment interest at the
  simple rate of interest determined by the court. The rate set by the court
  may not be less than six percent (6%) per year and not more than ten
  percent (10%) per year." Accessed 2026-07-05:
  https://iga.in.gov/ic/2025/Title_34/Article_51/Chapter_4.pdf
• IC 24-4.6-1-102 -- "When the parties do not agree on the rate, interest on
  loans or forbearances of money, goods or things in action shall be at the
  rate of eight percent (8%) per annum until payment of judgment." Accessed
  2026-07-05: https://law.justia.com/codes/indiana/title-24/article-4-6/chapter-1/section-24-4-6-1-102/
• IC 24-4.6-1-103 -- "Interest at the rate of eight percent (8%) per annum
  shall be allowed: (a) From the date of settlement on money due on any
  instrument in writing which does not specify a rate of interest and which
  is not covered by IC 24-4.5 or this article; (b) And from the date an
  itemized bill shall have been rendered and payment demanded on an account
  stated, account closed or for money had and received for the use of
  another and retained without the other person's consent." Accessed
  2026-07-05: https://law.justia.com/codes/indiana/title-24/article-4-6/chapter-1/section-24-4-6-1-103/
• Kosarko v. Padula, Inman v. State Farm Mut. Auto. Ins. Co., Alsheik v.
  Guerrero, and Wisner v. Laney (all Ind., decided Dec. 12, 2012) --
  companion decisions establishing that the TPIS gives trial courts broad,
  largely unreviewable discretion, and that the statute reaches UM/UIM
  insurance disputes as claims "arising out of tortious conduct." Discussed
  via a Barrett McNagny LLP summary, used only to identify the cases and
  their holdings, not to ground any statutory text.
• Lash v. Kreigh, No. 22A-CC-1069 (Ind. Ct. App. 2023) -- denied contract
  (quantum meruit) prejudgment interest because the damages were not
  ascertainable from the parties' agreement, illustrating the common-law
  gate that layers on top of IC 24-4.6-1. Discussed via an Indiana Lawyer
  news report, used only to confirm the case's holding, not as a grounding
  source for statutory text.