What Are Compensatory Damages?

When you win a personal injury lawsuit, the judge in your case will most likely award you compensatory damages. But what are compensatory damages, and how are they different from punitive damages? Here’s what you need to know.

Defining Compensatory Damages

In a lawsuit, the term damages refers to a sum of money that the person responsible for your injuries is required to pay you. In the overwhelming majority of cases, the money comes from an insurance company – not the person or company who’s really responsible for your injuries.

Compensatory damages are designed to compensate you for your losses. Those losses can include money you spent on:Compensatory Damages

  • Medical bills
  • Hospital bills
  • Rehabilitation or physical therapy
  • Medications
  • Nursing home care
  • Domestic services and assistance
  • Increased living expenses
  • Lost wages or lost employment income
  • Property replacement or property repair
  • Transportation

The judge in your case can also award you compensation for things that don’t have an actual price tag attached to them, like:

  • Mental anguish
  • Disfigurement
  • Future medical expenses
  • Future lost wages
  • Pain and suffering
  • Loss of opportunity
  • Loss of enjoyment of life

It can be difficult to effectively measure compensation for these things – unlike medical bills, the cost of continuing care and lost wages – which means that courts often make these general awards based on case-specific evidence and the outcomes of similar cases.

Do You Get Compensatory Damages If You Settle Out of Court?

If your case settles out of court, you don’t have to go before a judge. Your personal injury attorney will negotiate with the other party’s insurance company to reach a fair settlement – that’s a dollar figure designed to compensate you for your injuries and losses.

Only a judge can award damages. When your attorney reaches an agreement with the other party, it’s called a settlement.

In some cases, the settlement that the other party’s insurance company offers is far lower than what a judge or jury would award in court. If the settlement the other party offers isn’t fair and negotiations aren’t working, your lawyer may suggest that you take the case to trial.

How Are Compensatory Damages Different From Punitive Damages?

Where compensatory damages are designed to make up for the money you’ve lost and compensate you for what you’ve been through, punitive damages have a different function. They’re designed to punish the guilty party. They’re also called exemplary damages, and the courts award them to deter other people or companies from wrongdoing. You can only receive punitive damages if you’ve also received compensatory damages.

Under the Texas Damages Act, there’s a cap on the amount of money you can receive in punitive damages, unless the act that caused your injury was a felony. There’s no cap on the amount of money a judge can award you for compensatory damages, though (except in medical malpractice cases, but that’s another story).

Could You Be Entitled to Compensatory Damages in a Personal Injury Lawsuit?

You could be entitled to receive compensatory damages as a result of a truck accident, slip-and-fall accident, oil field accident or a number of other accidents. If you are, you may need the help of a strong negotiator on your side – one with experience dealing with big insurance companies that are unwilling to do what’s right. You deserve an experienced advocate to fight for your rights.