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What Is The Difference Between Compensatory Damages And Punitive Damages?

What Is The Difference Between Compensatory Damages And Punitive Damages?

iLawyer December 24, 2020 Personal injury

If you or a loved one sustain an injury caused by the actions of another individual, business, or entity, it is possible that you could receive compensation for your injuries and other losses. However, securing compensation can be difficult and confusing, particularly when understanding what types of “damages” you may receive. Here, we want to discuss two terms that are thrown around during the personal injury process – “compensatory damages” and “punitive damages.”

Understanding compensatory damages

Compensatory damages describe the damages that a person can receive compensation for that were caused directly by their accident. These damages are typically broken down into “economic damages” and “non-economic damages.”

  • Economic damages. These are also referred to as special damages, and revolve around compensation that is calculable. For example, common economic damages include a person’s medical bills, lost income, property damage, out-of-pocket expenses, etc.
  • Non-economic damages. These are also referred to as general damages, and revolve around compensation that is not as easy to assign a monetary value to. The most common types of general damages include an injury victim’s pain and suffering, loss of quality of life, mental anguish, lost future earning capacity, and more.

Economic damages are usually calculated by gathering all bills and receipts and adding them up to reach a total. Non-economic damages are often calculated by using a “multiplier method” that includes taking the total obtained for economic damages and multiplying that by a set number (usually 1.5 to 5).

For example, if an injury victim’s economic damages equaled $10,000, a multiplier of three could be used to come up with a total of $30,000 for non-economic damages. In total, the injury victim and their attorney would ask for $40,000 in compensation.

Understanding punitive damages

Punitive damages are very different from other damages awarded in a personal injury case. These are often referred to as exemplary damages, and they are assigned only in cases it is discovered that the defendant in the case acted grossly negligent or intentionally to cause harm to the plaintiff. Punitive damages are more common when a person’s illegal behavior caused injuries to somebody else (and these damages are separate from any criminal penalty they may face).

Additionally, punitive damages can be awarded in non-criminal cases. For example, if a company knowingly peddled a defective product, punitive damages may be awarded to send a signal that this type of behavior is not acceptable.

Are damage is limited in Arizona?

In some states around the country, the total amount of compensation that can be awarded to personal injury victims is limited, or capped, by law. For example, California does not place a limitation on economic or non-economic damages, except in cases involving medical malpractice where non-economic damages are limited to $250,000.

Damage caps are prohibited under Arizona’s constitution. Specifically, when we turn to Article 2, Section 31 of the Arizona Constitution, we can see that: “No law shall be enacted in this state limiting the amount of damages to be recovered for causing the death or injury of any person.”

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