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What Are Compensatory Damages?
Compensatory damages refer to money awarded to an injured party in compensation for damages, injury, or another incurred loss due to the negligent or unlawful conduct of another party. In civil court cases, plaintiffs must prove that losses are attributable to the defendant. Plaintiffs must also be able to quantify the amount of loss for the jury or judge. There are two types of compensatory damages—general and actual. Actual damages awarded are intended to provide funds to only replace what was lost by the plaintiff. General compensatory damages awarded are more complex, as they don’t represent a monetary expenditure.
Key Takeaways
- Compensatory damages are awarded to a plaintiff to cover losses from another party’s negligence or unlawful actions.
- There are two main types of compensatory damages: actual and general.
- Actual damages cover quantifiable losses like medical bills and lost wages, while general damages address non-monetary impacts like pain and suffering.
- Courts use methods like the multiplier or per diem to calculate general compensatory damages.
- Compensatory damages differ from punitive damages, which aim to deter future misconduct.
Actual damages provide the exact monetary amount needed to replace what was lost. Compensatory damages typically cover damages, injuries, or other losses in civil cases. As we’ll explore further in the article, they are different from punitive and treble damages.
Important
Compensatory damages can be classified into two types: actual and general.
Real-Life Examples of Actual Compensatory Damages
- Medical and hospital bills
- Medical treatments
- Rehabilitation expenses
- Physical therapy
- Ambulance expenses
- Medicine and Prescription drugs
- Nursing home care
- Domestic services
- Medical equipment
- Lost wages or lost employment income
- Increased living expenses
- Property replacement or repair
- Transportation
To be awarded actual compensatory damages, the plaintiff must prove that losses suffered equate to a defined monetary value. Also, states might mandate collateral source rules (CSRs) that prevent the reduction of awarded damages due to payment recovered from a third party.
Illustrative Cases of General Compensatory Damages
General compensatory damages, meanwhile, include estimates of loss not involving actual monetary expenditure. Some courts use the “multiplier method,” which calculates general damages by multiplying the sum total of one’s actual damages by a number that signifies the seriousness of the injury.
In other jurisdictions, courts will use the “per diem” method, which attaches a dollar value to each day a plaintiff suffers and adds the value of all those days together. In some cases, a court will use a hybrid of these two methods to calculate general compensatory damages. These general compensatory damages include:
- Mental anguish
- Disfigurement
- Future medical expenses
- Future lost wages
- Long-term physical pain and suffering
- Loss of consortium
- Inconvenience
- Loss of enjoyment of life
- Loss of opportunity
Compensatory damages are typically awarded in medical malpractice lawsuits, usually for medical bills, hospital bills, rehabilitation expenses, and compensation for lost earnings. Some compensatory damages can be difficult to assess. For example, the value of lost wages will be much higher for a more affluent member of society versus someone who is poor or retired.
Distinguishing Compensatory Damages From Punitive Damages
Compensatory damages differ from punitive damages, which may compensate over and above any loss or damage incurred and are meant to provide an incentive against repeating the act that caused the plaintiff’s loss or damages.
Cases related to compensatory and punitive damages are a major source of debate in the field of health insurance, as proponents of tort reform claim that excessive damages above the actual loss incurred can increase the overall cost of healthcare.
Compensatory damages are intended to compensate the plaintiff of a lawsuit with enough money to cover the loss caused by the defendant.
Comparing Compensatory and Treble Damages
Treble damages are punitive, intended to deter the same offense. They allow a plaintiff to receive up to three times the actual or compensatory damages when a defendant purposefully or willfully violates a law.
What Is Another Word for Compensatory?
Another word to describe compensatory damages is offsetting, redeeming, or remunerative.
What Is a Compensatory Activity?
As it applies to the law, compensatory activities are usually awarded in the form of monetary payments.
What Are the 3 Types of Damages?
The three types of damages are economic damages, non-economic damages, and punitive damages.
What Are General Compensatory Damages?
General compensatory damages cover all non-monetary damages when referencing an injury claim, such as for pain and suffering.
Do Compensatory Damages Include Emotional Distress?
Compensatory damages can refer to emotional distress, including mental anguish and loss of enjoyment of life.
The Bottom Line
Compensatory damages are aimed at making a plaintiff whole by covering measurable losses. There are two types of compensatory damages: actual and general. Actual damages cover direct costs like medical bills and lost wages, while general damages address non-monetary impacts like pain and suffering. A plaintiff must prove a loss occurred and quantify it in court to receive compensatory damages. Additionally, compensatory damages differ from punitive damages, which are intended to punish the defendant, and treble damages, which apply when a law is willfully violated.
Correction—July 30, 2023: This article previously stated that treble damages are invoked when a plaintiff has purposely or willfully violated a law. It has been corrected to read that damages are invoked when a defendant has purposely or willfully violated a law.
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