Compensatory vs. Punitive Damages: What Is the Difference?

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Understanding compensatory vs. punitive damages differences can help determine whether you receive your full settlement. Compensatory damages compensate injury victims for actual losses from an accident, while punitive damages punish the defendant for extreme gross negligence and willful malicious conduct. The personal injury lawyers at Sieben Polk Law Firm are ready to listen to your case and offer personalized legal counsel and representation.

You can receive two types of damages in a personal injury claim: compensatory and punitive. These damages serve contrasting purposes and are calculated differently. 

At Sieben Polk Law Firm, our personal injury lawyers tailor legal counsel to the unique needs of individual clients. We have decades of experience protecting the rights of people in Minnesota and the Upper Midwest and extraordinary case results.

What Are Compensatory Damages?

Compensatory damages are for the tangible and intangible losses caused by another person’s negligence. The purpose is to ensure you don’t pay out of pocket and are made whole for injuries you didn’t cause

Two types of compensatory damages are recoverable in a personal injury action: special and general.

Special Damages

Special damages reimburse you for the financial expenses incurred from a personal injury. Your attorney will refer to documented physical evidence, such as medical bills and monthly wages, to calculate the precise value. Common examples of special damages include:

  • Past, current, and future medical treatment costs
  • Prescription drugs costs
  • Assistive medical equipment
  • Therapy or mental counseling
  • Home caregiving costs
  • Residential accommodations for resulting disabilities
  • Transportation to and from the hospital
  • Costs for domestic services you previously provided
  • Lost wages and opportunity to make a living
  • Property damages

General Damages

General damages are non-economic damages. They compensate you for subjective and intangible losses, such as pain, suffering, and emotional distress. Calculating general damages depends on the type of claim and individual state laws. Minnesota has no cap on the non-economic damages recoverable in a personal injury action. However, Wisconsin and North Dakota have limits on the amount of general damages you can receive.

Examples of general damages in a personal injury case are:

  • Physical pain and mental suffering
  • Emotional anguish
  • Loss of consortium
  • Loss of enjoyment of life
  • Tarnished reputation
  • Mental distress
  • Disabilities and disfigurement

A personal injury attorney may use the per diem or the multiplier methods to determine your total non-economic damages. In the multiplier approach, the value of your economic damages is multiplied by a number between 1.5 and 5, depending on the severity of your injuries. The per diem method assigns a particular amount to be awarded daily for the period spent in recovery.

Examples of Cases When Compensatory Damages Are Awarded

Compensatory damages are typically awarded for all personal injury claims with tangible evidence of negligence and resulting losses. You can seek compensatory damages for:

What Are Punitive Damages?

Punitive damages punish the defendant for egregious behavior when the defendant acts with a deliberate disregard for the rights or safety of others. They also aim to deter the defendant and others from similar negligent actions. Hence, they are also called exemplary damages. Punitive damages are awarded in addition to compensatory damages.

Factors Considered by Courts in Determining Punitive Damages

A judge decides when and how much to award for punitive damages. Factors that come into play include:

  • The severity of the actions in terms of malice and gross negligence
  • History of awards in similar cases 
  • Level of harm caused

Examples of Cases When Punitive Damages Are Awarded

Judges only award punitive damages in extreme gross negligence cases or when a defendant acted knowingly. 

One example is a drunk driving accident when the defendant knowingly gets behind the wheel, causing an accident that injures other people. Victims might receive punitive damages because of the level of harm, the severity of the crime, and the general knowledge of the dangers of drunk driving.

Compensatory vs. Punitive Damages

Understanding the differences between compensatory and punitive damages and how they apply to your personal injury claim can determine how much compensation you receive. An experienced personal injury lawyer can provide the information you need to make informed decisions. An attorney will also collect evidence on your behalf to prove claims and negotiate with insurance companies for a maximized settlement. If the insurance company is unwilling to settle for the compensation you deserve, a skilled lawyer will file a lawsuit to initiate court trial hearings. 

Here are the main differences between compensatory and punitive damages:

Compensatory Damages Reimburse Actual Losses, While Punitive Damages Punish the Defendant

Compensatory damages reimburse you for all the losses you’ve suffered from an accident caused by someone else’s negligence. To do so, your attorney will investigate and gather evidence of your monetary expenses and the intangible ways the accident has affected you and your loved ones. Compensatory damages aim to bring your financial situation back to where you were before the accident. 

On the other hand, punitive damages punish the defendant for egregiously negligent behavior. These actions go beyond mere negligence and involve malice, intention to harm, or a deliberate disregard for others’ safety.

The Magnitude of Injuries Determines Compensatory Damages, While Judges Determine Punitive Damages Amounts

A personal injury lawyer will evaluate your injuries and how they’ve affected your life to calculate the total compensatory damages you’re owed. Some factors include the severity of your injuries, days missed from work, property damage, mental trauma caused, and the inability to enjoy life activities such as hobbies. Most states do not limit the value of special damages you can receive, but many have caps on general damages. 

In Minnesota, the following factors must be considered when determining whether to award punitive damages: 

  • The seriousness of the hazard to the public arising from the defendant’s misconduct,
  • The profitability of the misconduct to the defendant,
  • The duration of the misconduct and any concealment of it, 
  • The degree of the defendant’s awareness of the hazard and its excessiveness, 
  • The attitude and conduct of the defendant upon discovery of the misconduct, 
  • The number and level of employees involved in causing or concealing the misconduct,
  • The defendant’s financial condition
  • The total effect of other punishment likely to be imposed over the misconduct, including damage awards to others and the severity of any criminal penalties

Most states have a limit on the amount of punitive damages you can receive after a personal injury. However, Minnesota does not impose a cap on punitive damages, leaving it to the judge to review any award in light of the specified factors.

Compensatory Damages Are Awarded in Every Successful Claim, While Punitive Damages Are Rarely Awarded

Proving negligence for a personal injury claim requires proof of the losses suffered. Therefore, compensatory damages are awarded in all successful claims, with the specifics differing in each case. 

Judges consider many qualifying factors when deciding whether to award punitive damages. Because these factors are associated with the defendant’s actions, cases that receive punitive damages are only a small percentage of the total personal injury claims filed.

Importance of Having Legal Representation

Sieben Polk Law Firm is nationally recognized and locally rooted. Our skilled personal injury lawyers are committed to aggressively fighting for the rights of injured persons in Minnesota, North Dakota, and Wisconsin. We understand the legal terrain of the Upper Midwest areas, and we’re ready to pursue the types of damages your case deserves.

Contact us at 651-437-3148 for a free initial consultation. You don’t pay us unless we obtain compensation for your claim.

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