What is the Difference Between Compensatory and Punitive Damages?


If you or someone you know has ever been involved in a personal injury case or lawsuit, you may have heard talk about damages or compensation awarded to the victim. When someone is injured in an accident or attack caused by the negligence or liability of someone else, they have the legal right to file a claim or lawsuit against the offender. If it can be proven that the injury was the defendant’s fault, the defendant likely owes financial compensation to the victim in the form of compensatory and punitive damages. To speak to a skilled lawyer about your case and acquire experienced legal counsel to maximize your chance of receiving compensation, reach out to a Middlesex County personal injury attorney today.

What is the Definition of Compensatory Damages?

Compensatory damages are financial awards given to the victim from the defendant to cover the monetary expenses of losses associated with the accident or injury. Compensatory damages can be categorized as special damages or general damages.

Special damages are considered to be payment for real and tangible losses experienced by the victim. For example, they might include enough compensation to reimburse the victim for:

  • Medical bills and expenses
  • Property damage
  • Loss of wages or income

General damages can refer to non-physical issues. Depending on the circumstances of the accident or injury, the victim may be suffering mentally. Some psychological damages that can be included in the calculation for compensatory damages include:

  • Physical pain and suffering
  • PTSD
  • Other mental or emotional disorders
  • Reduced life expectancy
  • Loss of enjoyment of life

What is the Definition of Punitive Damages?

Punitive damages may also be referred to as exemplary damages and are an additional form of monetary payment given to the victim from the defendant if the defendant acted with:

  • Gross negligence
  • Extreme recklessness
  • Malicious intent

Punitive damages do not cover any real expenses because they should have all been taken care of by the compensatory damages awarded. Punitive damages are awarded alongside compensatory damages, not on their own.

What is the Main Difference?

The main difference between the two can be found in their names. Compensatory damages are compensation for the victim’s losses, while punitive damages are penalties intended to penalize the defendant for their actions.

Punitive damages really have nothing to do with the victim themself, they are simply benefiting financially from the court’s wish to emphasize the defendant’s wrongdoing. The goal of ordering punitive damages is to deter the defendant and others from acting in similar ways again.

Is there a Limit on How Much Compensation a Victim Can Receive?

Under New Jersey state law there is no cap on how much compensatory damages a defendant can be ordered to pay a victim. This is true for both economic and non-economic damages.

However, like many states, there is a limit to punitive damages. Punitive damages cannot exceed $350,000 or five times the amount of compensatory damages awarded, whichever value is higher.

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