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Date Modified: September 9, 2023

Compensatory damages refer to the monetary compensation awarded to a plaintiff in a civil claim to cover the losses or damages suffered as a result of the defendant’s actions. Damages can be computed on a variety of factors. One type is computing damages to compensate for a previous wrong.

Under “compensatory” damages, a Plaintiff Can recover if harm has already occurred. However, the plaintiff cannot recover for continuing damages—must bring successive actions for subsequent harm. This video will explain the ropes.

  • Video Transcript - What Are Civil ‘Compensatory Damages’?

    Video Transcript - What Are Civil ‘Compensatory Damages’?

    "0:00 what are compensatory damages in a civil
    0:02 claim compensatory damages are damages
    0:06 designed to compensate the plaintiff for
    0:09 the harm or for the breach in order to
    0:14 make them whole. [Music]"

More About Compensatory Damages in a Civil Claim?

Compensatory damages, commonly referred to as actual damages, arise in personal injury cases. They come in the form of money awarded to the injured party for the damages incurred (financial and intangible losses) due to another’s negligence. In a personal injury case, an injured victim must prove that they suffered a loss and that the defendant’s negligence resulted in the plaintiff’s damages. The plaintiff must also quantify the losses before filing a claim or a lawsuit. There are two types of actual damages, and these include special and general damages.

Difference between Special and General Damages

Both types of damages, special and general, aim to compensate the victim for their loss. However, the two are entirely different categories of damages. Special damages, also known as economic damages, are monetary awards given to the plaintiff to recover their losses arising from the defendant’s negligence. The victim’s out-of-pocket expenses include medical bills, hospital bills, physical therapy costs, nursing home care, increased living expenses due to medical needs, rehabilitation expenses, prescription medications, and lost wages.

General damages are monetary awards to the victim for the feelings they are experiencing from an incident due to the defendant’s wrongdoing. These types of damages are subjective, as feelings may vary from one plaintiff to the other. Some general damages include emotional distress caused by physical injury, mental anguish, disfigurement, physical pain, suffering, loss of quality of life, and future lost wages. Under American Rule, legal fees are not part of compensatory damages and are not recoverable in a personal injury lawsuit.

Calculating Compensatory Damages

When filing a personal injury claim or a lawsuit, the plaintiff must mention the exact dollar amount of compensation they wish to seek from the defendant. That means calculating compensatory damages, both special and general.

How to Calculate Special Damages

Special damages are easier to calculate than general damage in a civil lawsuit. These can be determined by adding up the money lost to medical bills, hospital bills, property damage, and lost income. To calculate lost income, add the daily wages from the date of the accident until the date the plaintiff returns to work. Plaintiffs can easily calculate medical expenses by collecting all the receipts and bills and adding them. Property damage could involve repair bills or replacement costs.

How to Calculate General Damages

General damages are far more challenging to calculate as it is difficult to put a dollar value to the actual pain and suffering, emotional distress, or other general damages experienced following an accident. Courts and insurance companies use either the multiplier or “per diem” methods. The multiplier method multiplies all special damages with a multiplier typically between 1.5 and 5, depending on the severity of the injuries.

The per diem method attaches a dollar value per day to the plaintiff’s suffering, which is then multiplied by the number of days the plaintiff suffers from their injuries. In some cases, courts may use a combination of the two methods to calculate general damages. Just as it is hard to calculate general damages, it is even more challenging for victims to prove these types of damages. For example, to prove emotional distress, you must have receipts to show that you visited a therapist and expert testimonies that could explain your mental state and how it has affected your daily life.

Working with an experienced personal injury attorney after an accident is important to increase your chances of recovering maximum compensation. A reputable law firm has the resources to help assess and calculate the actual compensatory damages, obtain the necessary proof, and fight for your rights.

What Are the Differences Between Compensatory and Punitive Damages?

Compensatory damages aim to compensate the victims monetary for their losses. At the same time, the court awards punitive damages to compensate the victims, punish the defendant for their grossly negligent misconduct, and deter others from carrying out similar acts of unlawful conduct.

Although the courts can award punitive damages in any type of case, they are often awarded in cases where the defendant is grossly negligent, including drunk driving, medical malpractice, and nursing home abuse. There is a serious debate over punitive damages and whether they should be limited. Regarding health insurance, punitive damages do more harm than good as it increases the overall cost of the healthcare system in the United States due to the excessive punitive damage awards.

The “over-deterrence” is also a massive problem for the healthcare industry as it continues to prevent medicine manufacturers from selling their medicines in the United States for fear of lawsuits’ excessive damages.

Who Pays the Compensatory Damages in a Personal Injury Case?

In a civil lawsuit, the defendant bears financial responsibility if the plaintiff wins the case. Typically, the defendant will have insurance to take care of the damages, which can lead to an out-of-court settlement. Depending on the type of accident, different parties could be responsible for paying the damages.

Let’s look at a couple of examples of who could be responsible for the following types of accidents:

  • Car accident: The negligent driver who caused the accident must pay for the compensatory damages.
  • Medical malpractice: The negligent doctor who administered wrong medical treatments or misdiagnosed the plaintiff’s injuries is responsible for paying compensatory damages.
  • Defective product accident: The manufacturer responsible for making and selling the product could be liable for the injuries due to their negligence.
  • Slip and fall accident: If the property owner knows of a hazard and does not take reasonable measures to ensure the safety of their guests, they may be responsible for compensatory damages to the injured victim.

Schedule a Free Consultation with Ehline Law

If you suffered injuries in an accident that was not your fault, contact us at (833) LETS-SUE for a free consultation, as you may qualify for compensation. Let our experienced personal injury attorneys handle your personal injury case and obtain the compensatory damages you deserve.

Michael Ehline is an inactive U.S. Marine and world-famous legal historian. Michael helped draft the Cruise Ship Safety Act and has won some of U.S. history’s largest motorcycle accident settlements. Together with his legal team, Michael and the Ehline Law Firm collect damages on behalf of clients.
Animation of injury lawyer, Michael Ehline Animation of injury lawyer, Michael Ehline

Michael Ehline

Top Injury lawyer, Michael Ehline, Esq.
We pride ourselves on being available to answer your most pressing and difficult questions 24/7. We are proud sponsors of the Paul Ehline Memorial Motorcycle Ride and a Service Disabled Veteran Operated Business. (SDVOB.) We are ready to fight.
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