Compensatory Damages

Compensatory Damages: Types, Examples, and Key Takeaways

What are compensatory damages?

Compensatory damages are monetary awards intended to make a plaintiff whole after losses caused by another party’s negligent or unlawful conduct. To recover compensatory damages in a civil case, a plaintiff must prove causation and quantify the loss for the judge or jury.

Two main types

• Actual (economic) damages: Quantifiable monetary losses that can be documented with bills, receipts, pay stubs, or expert testimony.
• General (non‑economic) damages: Non‑monetary losses that do not have a precise dollar value and are estimated by the court.

Examples

Actual (economic) damages:
* Medical and hospital bills
* Rehabilitation and physical therapy
* Prescription medications and medical equipment
* Ambulance and transportation costs
* Lost wages and lost earning capacity
* Property repair or replacement
* Increased living expenses and nursing care

General (non‑economic) damages:
* Pain and suffering
* Mental anguish or emotional distress
* Disfigurement and loss of consortium
* Loss of enjoyment of life
* Future medical expenses and future lost wages (when not yet incurred)
* Loss of opportunity or inconvenience

How general damages are calculated

Courts commonly use one of these approaches:
* Multiplier method: Multiply total economic damages by a number reflecting injury severity (e.g., 1.5–5).
* Per diem method: Assign a daily dollar value for each day the plaintiff suffers and add up those days.
* Hybrid approach: Combine elements of both methods or adjust for special circumstances.

Actual damages are calculated from documented losses (bills, invoices, wage records). States may apply collateral source rules that affect whether third‑party payments (like insurance) reduce recoverable damages.

Compensatory vs. punitive vs. treble damages

• Compensatory damages: Compensate the plaintiff for actual losses.
• Punitive damages: Awarded to punish the defendant and deter similar misconduct; they exceed actual losses and are discretionary.
• Treble damages: A statutory form of enhanced damages (often up to three times actual damages) used in certain willful or intentional violations of law.

Practical considerations and limits

• Plaintiffs must show causation and provide evidence to quantify losses.
• Valuing non‑economic losses is inherently subjective and can vary by jurisdiction, judge, or jury.
• Some jurisdictions impose statutory caps on certain damages (frequently in medical malpractice cases).
• Economic disparities can produce different damage awards for similar injuries (e.g., higher lost‑wage awards for higher earners).
• Tort‑reform debates often focus on the size and frequency of non‑economic and punitive awards and their effect on costs like health care premiums.

Key takeaways

• Compensatory damages are meant to restore the plaintiff to the position they were in before the injury.
• They divide into economic (actual) and non‑economic (general) damages.
• Economic damages are proven with documentation; non‑economic damages are estimated using multiplier, per diem, or hybrid methods.
• Compensatory damages differ from punitive and treble damages, which are intended to punish or deter wrongdoing rather than simply compensate losses.