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Understanding Compensatory vs Punitive Damages

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

Victims of injuries caused by the negligent actions of others have an avenue to legal recourse through personal injury law. When another party is at fault for the painful physical injuries, emotional trauma, and financial woes you have endured as a result of this incident, you may seek compensation to pay for the damages.

When your injury claim is unable to be resolved through a settlement negotiation with the at-fault party’s insurer, filing a lawsuit is the next step. Once you start working with a Chicago personal injury lawyer, they will discuss compensatory damages and punitive damages with you and how they may factor into your case.

At Agruss Law Firm, LLC, we help explain the difference between compensatory and punitive damages, allowing our clients to understand our approach to every case. This informative blog post sheds light on these damages and when they may be applicable, as well as how a qualified Aurora Injury lawyer from our legal team can be of assistance in personal injury matters.

Understanding Compensatory Damages vs Punitive Damages

Compensatory damages are often called general damages or actual damages. You may call them what you like, though they refer to the losses that a plaintiff has endured as a result of the negligent actions of another. Items that are considered compensatory damages tend to include medical expenses, pain and suffering, lost income, and property damage. They make up the bulk of a settlement or award in a personal injury case.

On the other hand, there are also punitive damages, which are also called exemplary damages. These damages are intended to punish the defendant in a lawsuit for their grossly negligent or malicious acts to serve as a deterrent for others who may be in similar situations. Read on to learn more about the intricate distinctions between compensatory and punitive damages.

Compensatory and Punitive Damages Explained

The difference between compensatory and punitive damages mostly involves the fact that compensatory damages are the proven losses a plaintiff incurs from a personal injury accident while punitive damages are an additional measure of punishment. Each of these damages is discussed in greater detail below:

Compensatory Damages

Compensatory damages serve as a form of restitution to injured victims in personal injury accidents. These accidents could be car crashes, slip and fall accidents, dog bites, and many other types of scenarios. The law allows you to recover compensation to make your life as whole as is possible again after an accident that was not your fault.

You can seek general damages in a settlement, though if filing an injury claim with the liable party’s insurance company results in a denial of the claim or too low of an offer, you’ll want to bring a lawsuit to the courts. Compensatory damages include both economic damages and non-economic damages that have taken a toll on your life.

Economic Damages

Economic damages refer to the financial losses you have suffered as a result of your personal injury accident that are quantifiable by bills or receipts. They can be traced to the exact dollar amount, and if they are related to the injuries from your accident, you can factor them into your compensation claim.

These tend to include your medical expenses such as your hospital stay, surgeries, rehabilitation, physical therapy, and prescriptions. Your economic damages may also include any property damage, lost income from being unable to work, and other out-of-pocket expenses that can be linked to your injuries.

Non-Economic Damages

The other part of compensatory damages are non-economic damages, which are not as easily quantifiable. They do not have receipts or bills to pinpoint the exact amount of your loss, though they are an important part of your compensation. The non-financial losses you’ve incurred could include loss of enjoyment of life from being no longer able to participate in activities that you once enjoyed. They may also include your pain and suffering, disfigurement, and emotional distress.

Every personal injury case will have its own distinctions, even when they are similar in nature, such as with car accidents. You could compare two car accidents that occurred in the same way, such as a T-bone accident. One may result in minor injuries for the victim though the other may render a victim completely paralyzed.

When you have severe injuries that will permanently impact your future, it is essential to discuss your case with a Chicago car accident lawyer who can help you fight for a fair settlement that includes all applicable compensatory damages. Those who try to seek compensation on their own often do not realize the full worth of their case. You may calculate all of your past and current medical expenses as well as the income you lost from missing work.

However, if you don’t consider that you will no longer be able to work in the same type of job again or consider the future costs of your ongoing medical care, you will be cheating yourself out of the compensation you deserve. In essence, compensatory damages can be highly detailed and you should know what is applicable when seeking the right level of compensation for your case.

Punitive Damages

As mentioned previously, punitive damages or exemplary damages are meant as a form of punishment for the defendant and a powerful deterrent to discourage others from behaving as the defendant did. These damages do not reimburse you for the physical, emotional, or financial damages you suffered at the hands of the negligent party.

The key difference between compensatory and punitive damages is that punitive damages are rare. They are not awarded by the courts in every personal injury case. In order for punitive damages to be sought, the defendant’s actions need to be deemed egregious in nature, done with such malicious intent or gross negligence that it warrants an extra measure of punishment.

It will be up to the courts if punitive damages are imposed, and if so, to what degree. If these elements are a part of your personal injury case, especially if the at-fault party is a corporation or other entity, your attorney may be able to persuade the courts to add this final touch of punishment to the verdict at the conclusion of your court case.

However, you should understand that the likelihood of punitive damages being awarded is exceptionally rare. If you are concerned about your compensatory damages and wonder if punitive damages may be awarded in your case, you should discuss this with your attorney.

Breaking Down the Most Common Types of Compensatory Damages in Personal Injury Cases

Since punitive damages are rare and they do not provide you an additional financial reward, you should focus most on the compensatory damages you may receive for your injuries. Every case will have its own unique factors where certain economic or non-economic damages may or may not apply.

Additionally, you should be aware that other factors can impact the amount you may receive. When calculating the non-economic damages in your personal injury lawsuit, they often are reflective of the type and severity of your injury, your expected recovery period, and the duration of your hardships. In other words, plaintiffs who have serious injuries that will take a long recovery period or are permanent are more likely to get a larger award for compensatory damages.

Medical Expenses

Since a personal injury case requires that the victim suffer physical harm from a person or entity who had a duty of care that they breached, medical expenses are always a part of a claim. The bills you’ve already paid for these injuries, the other medical bills that are yet to be paid, and any future treatments you will need can all be requested as part of the compensation.

The best thing you can do after these injuries is to organize all medical expenses into a file. Your attorney will be able to use this information to calculate the full amount of your medical expenses for your damages.

Lost Income

If you were currently employed at the time of your personal injury, you will need to take time off of work. Minor injuries may only mean you miss a few days of work, though the wages you lose or the benefits you utilize for sick days or vacation days can also be compensated.

Additionally, if you have been injured to the degree that you cannot ever perform the duties of your job again or any other type of job, you should be properly compensated for your loss of earning capacity. It is not fair that you should be thrust into a state of financial ruin when someone else’s negligent actions are the reason you can no longer support your family.

Property Damage

Not every personal injury case will involve damage to your personal property. It is a common type of economic damage caused by car accidents and bicycle accidents. If any item of your personal property was damaged or destroyed by this incident, it can be included in the compensatory damages you seek in your lawsuit.

Pain and Suffering

The physical pain and the emotional stress you suffer from your injuries may prevent you from enjoying life. Many injury victims who have lost limbs, become paralyzed, or suffer disfiguring burns live with pain every day. They also live with depression, anxiety, post-traumatic stress disorder (PTSD), and fear that may last for years.

Even those who are fortunate enough to heal from their injuries may be subject to pain and suffering to varying degrees. The non-economic damages in your compensatory damages will require the skills of your attorney to demonstrate their impact on your life. It can help to keep a daily journal where you log your recovery, the level of pain you feel, and your struggles. Witnesses such as family, friends, and coworkers may be called in to testify about the extent of your emotional anguish after these events along with mental health professionals who can present their diagnosis and prognosis.

Pain and suffering is typically calculated by using the multiplier method, which requires adding all of the economic damages together and multiplying them by a number. The multiplier is a number from 1.5 to 5, with 5 being reserved for the most catastrophic injuries.

If you are expected to heal from your injuries, you will likely be assigned a multiplier of 1.5. However, if you will never recover from these injuries, you will likely receive a multiplier of 5. Someone with a clean fracture of a leg in a car crash may have a calculated loss of $35,000 from economic damages, resulting in a low multiplier of 1.5. With this example, they would get $52,500 for pain and suffering. Someone who nearly died from their injuries and will require ongoing medical care may have $100,000 in economic damages and a multiplier of 5, resulting in $500,000 for non-economic damages.

There are many more economic and non-economic damages that may apply in your specific case. Your personal injury lawyer will go over every aspect of each one, add up the quantifiable amounts, and then make calculations for your non-economic damages to arrive at an appropriate settlement amount to begin negotiations. If your case cannot be resolved through a settlement agreement, your attorney will move forward with the lawsuit. At that point, it will be up to the courts to decide if punitive damages are necessary in your situation.

How the Courts Determine to Apply Punitive Damages

Through this understanding of compensatory damages vs punitive damages, it should now be clear that while you can always seek general damages in your personal injury case, punitive damages are a different story. Only a small percentage of personal injury cases will be eligible to apply punitive damages.

An example of when the courts might add punitive damages would be in a drunk driving case where the at-fault driver was above the blood alcohol limit. If that driver’s gross negligence severely injured others or caused fatalities, it is likely that punitive damages would apply.

The courts will consider certain metrics to decide whether to impose punitive damages. Firstly, the plaintiff must be awarded compensatory damages. Secondly, it must be determined that the defendant went beyond negligence to the point that their actions are deemed malicious, intentional, or reprehensible.

If punitive damages are imposed, then the court must determine the amount. They are awarded in proportion to compensatory damages. Your attorney will present a strong case on how the severity of the harm you have endured caused by the defendant’s actions have made their impact. While it is up to the judge or jury to make the final decision, there is a cap on punitive damages in Illinois. They must not be above three times the amount of the compensatory damages in a case. The caps on damages do not apply when involved in certain cases, such as those involving bad faith claims.

Why Legal Representation Is Advised When Seeking Compensatory and Punitive Damages

Suffering any kind of injury is never convenient, and when another person has caused this to happen to you, you should not be forced to endure more hardship. Many injured victims make the mistake of trying to deal with the insurance company themselves to file a claim. This is common with car accidents since they are the most common form of injury claim in the nation.

In Illinois, understanding compensatory damages vs punitive damages is just one element of the legal process. There are many other factors to consider, including the state’s at-fault insurance laws. In car accidents as well as other types of personal injury scenarios, the modified comparative negligence laws in the state will be another point of contention for you. The other party or their insurer may claim that you were either fully or partially at fault for your injuries. This would reduce your compensation by a percentage of the fault assigned to you.

When your compensatory damages are reduced, this means you wind up absorbing part of the costs of all these other expenses this person or entity caused by their negligence. If they were grossly negligent or acted with malice, you would be unable to request punitive damages. Even worse, if you are blamed for more than 50% of the fault, you will be barred from seeking compensation in this case.

It’s not as simple as your attorney will make it appear. Ensure that you have someone who cares about protecting your legal rights and fighting for the damages that you deserve. At Agruss Law Firm, LLC, we are committed to every case and helping injured plaintiffs recover the maximum compensatory damages possible while seeking punitive damages when applicable. Contact our firm today to schedule a free initial consultation to learn more about the damages that you may be able to seek in your case.

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