What Are Compensatory and Punitive Damages?

money and gavel compensatory damages

The costs of being in an accident can add up quickly. With the help of a skilled Memphis personal injury lawyer, you can fight for your right to compensation to cover your associated expenses. The compensation you receive can be found in the form of compensatory or punitive damages. While a defendant pays both types of damages to the victim, there are significant differences between the two, as discussed below.

How Are Compensatory and Punitive Damages Defined?

Compensatory and punitive damages are both money awarded from one person to another, but the similarities end there. A court will likely explain the types of damages being awarded and how they calculated the dollar amount.

Compensatory damages are damages paid to refund the victim for expenses they accrued due to their accident and injury. It can be expensive to get into a car accident, slip and fall, etc. Some costs that a victim can be reimbursed for after the incident can include the following tangible costs and psychological damage.

  • Medical expenses, e.g. ambulance rides, hospital visits, medication, physical therapy
  • Property damage, e.g. destruction of cars, automobiles, or other personal property
  • Loss of wages if the injury caused the victim to miss out on income from work
  • Legal fees, e.g. attorney fees and court costs
  • Development of mental disorders like PTSD, depression, anxiety, sleep disorders, etc.
  • Pain and suffering

If you are awarded punitive damages you are being given additional money from the defendant that has nothing to do with your expenses. When sentencing a defendant a court may decide they need to spend time in jail, do community service, serve time on probation, etc. Paying punitive damages is an additional way to penalize them for their negligence or recklessness.

What is the Main Difference Between the Two?

It might be obvious when you consider the names of the two types of damages, but the main difference between the two is the intention behind awarding them. They are both types of financial compensation given to the victim of an accident from the defendant, but the question is why are they being given?

Compensatory damages are being given as compensation or reimbursement. After the accident, the victim probably accumulated various costs, as discussed, that were not their fault. Since the accident was not their fault they should not have to pay for them. Compensatory damages are offered to counteract the financial losses that they sustained. The intention is to compensate the victim.

Punitive damages have a totally different intention. A court can decide to make a defendant pay additional damages that have nothing to do with the financial status or expenses of the victim. In fact, they have nothing to do with the victim at all, besides the fact that they are the ones receiving the monetary award. Punitive damages intend to punish the defendant further for their actions. They are a penalty that aims to deter the defendant from committing the same acts again and warn others to learn from their mistakes.