Pennsylvania: Prejudgment Interest Rules

The short answer

Pennsylvania doesn't have one prejudgment-interest statute; it has two unrelated systems that happen to answer the same question. A contract claim for money already owed gets interest as a common-law right, at whatever rate the contract sets or a 6%-a-year default if it's silent, running from the day payment was due. A claim for bodily injury, death, or property damage instead runs on Pa.R.Civ.P. 238, a rule of court called "delay damages": a rate tied to the Wall Street Journal's published prime rate plus 1%, but the clock doesn't start until a full year after the defendant was served with the lawsuit. Most other tort claims — the ones that are neither a contract debt nor bodily injury, death, or property damage — fall outside both systems and have no guaranteed right to prejudgment interest at all.

Requirements one by one

Governing law

Contract prejudgment interest in Pennsylvania isn't set by a dedicated statute. It's a common-law rule the Pennsylvania Supreme Court has followed "for over a century," most recently confirmed by adopting Restatement (Second) of Contracts § 354 in Fernandez v. Levin, 519 Pa. 375, 379 (1988), tracing back to the Restatement of Contracts (First) § 337(a), which the Court adopted in Penneys v. Pennsylvania R.R. Co., 408 Pa. 276 (1962). That common-law rule borrows its numerical rate from a real statute, 41 P.S. § 202 (the Loan Interest and Protection Law's "legal rate of interest" provision). Bodily injury, death, and property-damage claims run on a completely different source of law: Pa.R.Civ.P. 238, a procedural rule the Pennsylvania Supreme Court promulgates under its own rulemaking authority, not a statute passed by the legislature.

Interest rate

For a contract claim, any rate the parties actually wrote into their contract keeps applying after a breach. If the contract doesn't specify a rate, the default is 6% a year under 41 P.S. § 202. For a bodily injury, death, or property-damage claim, Rule 238 sets a floating rate: "the prime rate as listed in the first edition of the Wall Street Journal published for each calendar year for which the damages are awarded, plus one percent." The Pennsylvania Code's own addendum to Rule 238 publishes that rate every January; for 2026 the published prime rate was 6 3/4%, making the effective delay-damages rate 7.75% for periods falling in 2026.

When interest starts running

A contract claim's interest clock starts "from the time performance was due" — the date of the breach or the date the debt became payable, not the date suit was filed. A bodily injury, death, or property-damage claim works completely differently: Rule 238 damages for delay run "for the period of time from a date one year after the date original process was first served in the action up to the date of the award, verdict or decision." The first year after the defendant is served never earns delay damages at all — the rule gives the defendant that year to investigate and settle the case before the clock starts.

Contract vs. tort claims

These aren't just different rates on the same underlying rule — they're different rules entirely. Contract interest is a right traceable to nineteenth-century Pennsylvania common law and the Restatement of Contracts; it's called "interest" in the technical sense and requires no request beyond a normal damages claim. Rule 238 "delay damages" are a distinct, purely procedural mechanism limited by its own text to "bodily injury, death or property damage" claims, and courts have held it doesn't reach related claims like legal malpractice even when the underlying facts involve a personal injury. A tort claim that isn't for bodily injury, death, or property damage — most business-tort and dignitary-tort claims — has no guaranteed prejudgment interest under either system; a plaintiff can still ask a court for equitable prejudgment interest, but that's discretionary and not the topic of either statute or rule discussed here.

Mandatory or discretionary

For a contract claim, Pennsylvania courts have repeatedly held that when the breach is of "a contract to pay a definite sum of money" — or a performance whose value is fixed by the contract or calculable from a fixed standard or market price — prejudgment interest is a matter of right, not discretion. When the damages are instead consequential or otherwise not liquidated at the time of breach, the award of interest is left to the court's discretion. For a bodily injury, death, or property-damage claim, Rule 238 delay damages are added "at the request of the plaintiff" once the case is over, and the Pennsylvania Supreme Court has held it makes no difference whether the defendant was actually at fault for the delay — the rule's purpose is to encourage prompt settlement offers, not to punish misconduct. The only ways a defendant avoids delay damages are the rule's own exclusions, discussed below.

Simple or compound

Both systems use simple interest. The contract-side rule, quoting the Restatement of Contracts § 337(a) as adopted by the Pennsylvania Supreme Court, describes "simple interest at the statutory legal rate" as the standard. Rule 238 says so explicitly for delay damages too: the rate is calculated "plus one percent, not compounded."

Claims against the government

Delay damages under Rule 238 do apply against the Commonwealth and its agencies, but a well-known wrinkle changes how much they're worth. Pennsylvania's Sovereign Immunity Act caps total damages against a Commonwealth party at $250,000 per plaintiff (and $1,000,000 in the aggregate for the same incident) under 42 Pa.C.S. § 8528(b). In Woods v. Commonwealth Department of Transportation, 531 Pa. 295 (1992), the trial court had calculated delay damages on that reduced $250,000 cap rather than on the jury's full $1.5 million verdict — cutting the delay-damages award from over $622,000 down to about $103,731. The Pennsylvania Supreme Court reversed, holding that "the cap contained in the Sovereign Immunity Act did not extend to the imposition of damages for delay": delay damages are calculated on the full jury verdict, even though the underlying damages award itself still gets reduced to the statutory cap. Local political subdivisions (municipalities, school districts, and similar local agencies) are governed by a separate immunity scheme with their own damages cap, $500,000 in the aggregate under 42 Pa.C.S. § 8553(b).

Other exceptions

Rule 238 carves out two categories entirely: eminent domain proceedings (which have their own compensation-for-delay rule under the Eminent Domain Code) and cases where delay damages are already allowed without the rule, a reference to older case law allowing compensation for delay in destruction-of-property cases measurable by market value. Within an ordinary bodily injury, death, or property-damage case, the delay-damages clock also stops early if the defendant made a qualifying written settlement offer — kept open at least 90 days — that the plaintiff's eventual recovery didn't beat by more than 25%, or during any period of delay the plaintiff caused. A procedural trap worth flagging: Pennsylvania courts have held that a plaintiff who doesn't include the rule's required notice-to-defend language at the start of a delay-damages motion can forfeit the award entirely, even though the underlying right to delay damages is otherwise close to automatic.

What trips people up

The biggest mix-up is assuming Pennsylvania has one "prejudgment interest rate." It doesn't — a contractor owed money on an unpaid invoice and a driver hurt in a car accident are litigating under completely different rules, with different rates, different start dates, and different names ("interest" versus "delay damages"). Assuming the 6% contract rate applies to an injury claim, or that an injury claim's interest starts running from the date of the crash rather than a year after the lawsuit was served, will produce the wrong number.

The one-year "grace period" in Rule 238 catches people off guard. Delay damages on a bodily injury case don't start accruing until a full year after the defendant was served with the complaint — not the date of the injury and not the date the case was filed. A case that settles or goes to verdict within that first year earns no delay damages at all, regardless of how clear liability was.

The government-defendant rule in Woods cuts the other way from what most people would guess: delay damages against the Commonwealth are calculated on the jury's full verdict, not on the reduced $250,000 statutory cap the plaintiff actually collects on the underlying damages. That can make the delay-damages component of a capped government case unexpectedly large relative to the capped award itself.

Common questions

Is Pennsylvania's prejudgment interest rate 6%?
Only for a contract claim where the contract itself doesn't specify a rate. A bodily injury, death, or property-damage claim instead uses Rule 238's Wall Street Journal prime-rate-plus-1% formula, which changes every year and was 7.75% for periods in 2026.

When does the interest clock start on a car accident case?
One year after the defendant was served with the lawsuit — not the date of the crash. Rule 238 gives the defendant that first year to investigate and make a settlement offer before delay damages begin accruing.

Can I get interest on a breach-of-contract claim even if the contract doesn't mention interest?
Yes, if the amount owed was fixed by the contract or calculable from it. Pennsylvania treats that as a matter of right at the 6% statutory rate, not something a court has discretion to deny.

Do delay damages apply if I sue a Pennsylvania state agency?
Yes, and they're calculated on the jury's full verdict even though the agency's total liability for the underlying damages is capped at $250,000 per plaintiff under the Sovereign Immunity Act.

Statutes and sources

• 41 P.S. § 202 (Legal Rate of Interest) — "Reference in any law or document enacted or executed heretofore or hereafter to \"legal rate of interest\" and reference in any document to an obligation to pay a sum of money \"with interest\" without specification of the applicable rate shall be construed to refer to the rate of interest of six per cent per annum." Accessed 2026-07-05: https://www.palegis.us/statutes/unconsolidated/law-information/view-statute?txtType=PDF&SessYr=1974&ActNum=0006.&SessInd=0
• Pa.R.Civ.P. 238(a)-(b), (e) (Damages for Delay) — the delay-damages mechanism, one-year start date, Wall Street Journal prime-rate-plus-1% formula, and the eminent-domain and settlement-offer exclusions, quoted in full above. Accessed 2026-07-05: https://www.pacodeandbulletin.gov/secure/pacode/data/231/chapter200/s238.html
• 42 Pa.C.S. § 8528(b) (Commonwealth damages cap) — "Damages arising from the same cause of action or transaction or occurrence or series of causes of action or transactions or occurrences shall not exceed $250,000 in favor of any plaintiff or $1,000,000 in the aggregate." Accessed 2026-07-05: https://www.legis.state.pa.us/WU01/LI/LI/CT/HTM/42/00.085..HTM
• 42 Pa.C.S. § 8553(b) (local-agency damages cap) — "Damages arising from the same cause of action or transaction or occurrence or series of causes of action or transactions or occurrences shall not exceed $500,000 in the aggregate." Accessed 2026-07-05: https://www.legis.state.pa.us/WU01/LI/LI/CT/HTM/42/00.085..HTM
• Fernandez v. Levin, 519 Pa. 375, 379 (1988) — "For over a century it has been the law of this Commonwealth that the right to interest upon money owing upon contract is a legal right." Accessed 2026-07-05: https://www.courtlistener.com/opinion/2159499/fernandez-v-levin/
• Cresci Construction Services, Inc. v. Martin, 2013 PA Super 66 — quoting Penneys v. Pennsylvania R.R. Co., 408 Pa. 276 (1962) and Restatement of Contracts § 337(a): "simple interest at the statutory legal rate is recoverable as damages for breach of contract" where the sum is fixed, ascertainable by a contract standard, or set by market price. Accessed 2026-07-05: https://www.pacourts.us/assets/opinions/Superior/out/S37031R_12.pdf
• Woods v. Commonwealth Department of Transportation, 531 Pa. 295 (1992) — holding that delay damages against a Commonwealth party are calculated on the jury's full verdict, not the reduced statutory-cap amount, because "the cap contained in the Sovereign Immunity Act did not extend to the imposition of damages for delay." Accessed 2026-07-05: https://www.courtlistener.com/opinion/2062398/woods-v-commonwealth-department-of-transportation/