What distinguishes compensatory damages from punitive damages?

Compensatory damages are designed to reimburse the injured party for actual losses sustained due to wrongful conduct, such as medical expenses, lost wages, and pain and suffering. This type of damage aims to restore the claimant to the position they would be in if the harmful event had not occurred.

On the other hand, punitive damages serve a different purpose. They are awarded as an additional sum above compensatory damages and are intended to punish the wrongdoer and deter similar conduct in the future. These damages are not based on the actual harm incurred but rather reflect the severity of the wrongful conduct and the need to prevent such behavior.

Understanding this distinction is crucial in cases involving legal disputes, as it clarifies the rationale behind the monetary awards and emphasizes the balance between compensating victims and deterring wrongdoing in society.