What are Compensatory Damages?
Compensatory damages are financial awards to a plaintiff in a civil lawsuit intended to reimburse the individual for damages, injury, and/or other losses as a result of the action or inaction of the defendant. These damages may also have been incurred as a result of negligence or otherwise unlawful conduct.
Damages will only be awarded if the plaintiff can prove, to a preponderance of the evidence, that not only did the loss occur, but that the defendant is responsible in some manner.
Here is an article about different types of damages.
2 Types of Compensatory Damages
There are two different types of compensatory damages, general and actual. Depending on the incurred loss, a plaintiff may be entitled to either (or both) compensatory damages.
Actual Damages
Actual damages are damages that can be proven explicitly in a monetary fashion. These damages often have a receipt or a specific invoice that is attached to them and are therefore more manageable for a plaintiff to prove.
Actual damages may include things like medical treatment, physical therapy, domestic services, increased living expenses, or transportation. These values can be more easily proven as the plaintiff will generally have some form of documentation of the direct cost associated with each.
To prove these types of damages, the court will ask for documentation that includes:
- Photographs of injuries or damage
- Invoices or bills for repairs/expenses
- Receipts of any money paid
- Documentation for fair market values/replacement values
- Tax documents/W-2’s/pay stubs to show lost wages
The court may choose to award some or all of the plaintiff's amounts for actual damages. This is generally based on whether the plaintiff is considered to be partially at fault and therefore complicit in their own loss.
General Damages
General damages are damages that do not have a set monetary value attached to them. Therefore, general damages are more variable and challenging to prove. They are unlike actual damages, which are based on receipts and documentation.
These general damages include things like mental anguish, inconvenience, loss of opportunity, and future lost wages. The value of these must be argued by the plaintiff and mitigated by the defendant. Finally, they must be determined overall by the jury.
To prove these types of damages, the court will ask for documentation that may include:
- Reasonable expected income over the plaintiff’s life based on education/experience/etc.
- Documentation of expected future medical needs and costs associated
There may be minimal documentation available for this type of damage. The loss is generally not monetary but physical and mental. Because of this, the amounts may be variable and the plaintiff is able to ask for any amount that they choose under the law of the state or court that they reside in.
The court may or may not choose to award some or all of the plaintiff’s amounts for general damages. This may be because the court does not believe the amounts are representative of the actual future loss or because they think that the plaintiff is at least partially responsible for their own loss.
Here is an article about the two types of compensatory damages.
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Examples of Compensatory Damages
Compensatory damages can take the form of both actual and general damages. They can encompass direct bills associated with the loss and less concrete expenses related to the loss. They can also reflect past expenses and future expenses incurred due to the injury or loss. These include things such as:
- Medical/hospital bills
- Rehabilitation expenses
- Physical therapy
- Medicine/prescription drugs
- Nursing home care
- Medical treatments
- Ambulance expenses
- Domestic services
- Lost wages/lost employment income
- Increased living expenses
- Medical equipment
- Property replacement/repair
- Transportation
- Mental pain and suffering
- Disfigurement
- Future lost wages
- Future medical expenses
- Physical pain and suffering
- Loss of consortium
- Loss of enjoyment of life
- Loss of opportunity
- Inconvenience
This list, while extensive, is not exhaustive, and courts may decide to award further monetary support for plaintiffs if they can prove associated costs or losses to the court. Any costs that the plaintiff incurs as a direct or indirect result of the loss may be fully or partially the defendant’s responsibility. The courts will decide this.
Here is an article about the different types of compensatory damages.
Compensatory Damages v. Punitive Damages
In considering damages awarded to the plaintiff, the court will look at general and actual damages, which fall under the category of compensatory damages. They will also look at punitive damages.
Compensatory damages compensate the plaintiff for the loss that they have suffered. These damages include things like direct medical costs that the plaintiff incurs or the loss of their future wages. They are intended to make the plaintiff ‘whole again.’
On the other hand, punitive damages are designed to punish the defendant for wrongdoing. These damages are associated with the severity of the crime, negligence, or defendant’s act. Still, they are not necessarily associated with the specific damage done.
The idea behind punitive damages is to prevent the defendant, or others, from doing the same thing again. In a similar way to incarceration for certain types of crimes, the money paid is not expected to aid the plaintiff in any way related to the incident.
Damages might be determined based on an arbitration agreement between the parties if entered into before the breach. Otherwise, a settlement agreement may be formed, or a settlement and release agreement. Or the case could go to court for determination.
Here is an article about the difference between compensatory and punitive damages.
How to Calculate Compensatory Damages
Calculating compensatory damages can be a complex task for an individual plaintiff, which is why a lawyer will generally assist with this process. However, there are steps to ensure that this is done correctly.
- Step 1. Gather all bills associated with the incident, including medical bills, transportation, repairs, rehabilitation, etc.
- Step 2. Gather all documentation of the loss, including photographs, invoices, purchase orders, etc.
- Step 3. Determine and provide fair market value documentation for any lost/damaged items such as vehicles, jewelry, memorabilia, etc.
- Step 4. Gather documentation for all fees incurred in the defendant’s prosecution, including attorney fees, filing fees, etc.
Once you have determined the totals for all actual damages, you and your attorney can work together to determine general damages, which can be more difficult to set as they have no specific costs associated with them.
General damages, including pain and suffering, loss of consortium, loss of future employment, and similar expenses, may also have a set amount allowable under the court you bring your suit through. These damages are essential to remember when filing a lawsuit, even though they are not concrete.
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