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Home ► Blog ► What are Compensatory Damages and Punitive Damages?
In civil court, damages are the “award” or sum of money, the plaintiff receives either due to a settlement or a decision reached after a trial. This award essentially functions as compensation for the loss the plaintiff experienced, whether that be from personal injury, a faulty drug or device, or another catastrophe. A positive outcome for the plaintiff is welcomed in all litigations, but you may find yourself asking, “What are compensatory damages and punitive damages?”. These are the two main types of damages, each with their own set of ramifications against the defendant.
Punitive damages, also called exemplary damages, often occur when a company has been negligent, and people are harmed as a result of that negligence. They are designed as a monetary way to penalize the defendant for their actions. Often, punitive damages are used to make an example by punishing the defendant. By charging the defendant large amounts of money, the courts are setting an example for other companies and discouraging the repeated behavior.
Once punitive damages are awarded, the defendant must pay the plaintiff the designated amount.
Compensatory damages, or “actual damages,” are designed to compensate the plaintiff for the damages they have incurred. Compensatory damages are intended to compensate the plaintiff for their loss.
Special damages, referred to as actual damages are those damages that are easy to calculate. They include medical bills, lost wages, property damages, and any other out of pocket costs for the litigation. If there is a receipt, the expense is likely to qualify as special damage. Special damages are often not up for debate as counsel can easily prove how much the injury cost the plaintiff.
General damages are harder to quantify as they include subjective material. When a personal injury occurs, there is the obvious injury but then there are the damages that are not immediately visible: the healing, the emotional distress, the lasting trauma. Individuals often have incredibly different reactions to similar scenarios, therefore making it hard to put a cost on general damages.
However, a general rule of thumb is the more serious the injury, the higher the general damages. If someone is out of work and has multiple surgeries as a result of a serious car accident, they are likely to have higher general damages than someone who was in a fender bender.
The two most common methods of calculating a plaintiff’s general damages are the multiplier method and the per diem method. The multiplier method calculates the general damages by multiplying the sum total of the plaintiffs by a set number dependent on the severity of the plaintiff’s injury. The per diem method attaches a monetary value to every day the plaintiff has suffered because of the accident and adds the total of those days together. On occasion, the courts may use a combination of the multiplier method and the per diem method.
Disclaimer: As each case is unique, the monetary amount of compensatory and punitive damages may vary greatly between the two personal injury cases. The types of damages sought after are often negotiated by the attorneys on both sides and can vary greatly between cases. If you have any questions regarding your case, please contact us.
Learn More About the Lawsuit Process:
"What Is PUNITIVE DAMAGES? Definition of PUNITIVE DAMAGES (Black's Law Dictionary)." The Law Dictionary, 25 Feb. 2014, thelawdictionary.org/punitive-damages/
Hayes, Christi. "The Two Different Types of Compensatory Damages." The Law Dictionary, thelawdictionary.org/article/two-different-types-compensatory-damages/
Hayes, Christi. "Compensatory vs. Punitive Damages: What's the Difference?" The Law Dictionary, thelawdictionary.org/article/compensatory-vs-punitive-damages-whats-difference/
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