When an individual is injured due to the actions of another individual, the court can direct the offender to compensate the other person by giving money. These payments are referred to as damages. Nevertheless, not all damages are created equally.

The two types of damages that most people hear about in court cases are economic and punitive. Knowing the distinction between the two makes the victims aware of the type of compensation they can get and why.

What Are Economic and Punitive Damages?

Economic damages are calculated as financial losses that a victim suffers as a result of an injury or accident. They involve such things as medical expenses, property repairs, future treatment expenses, and lost earnings. These damages are founded on actual figures that can be substantiated with details of receipts, invoices, or financial documents.

On the other hand, punitive damages are not designed to compensate the victim. These are given to penalize the individual or firm that was reckless, intentional, or grossly negligent. The aim is to deter such bad behavior in the future.

How are Economic and Punitive Damages Different?

Many people often get confused between the types of damages in a personal injury claim. So let us take a closer look to understand the most significant distinction between economic and punitive damages.

Economic Damages

• Economic damages are concerned with compensation for the financial losses the victim faces.
• They want to restore the victim, financially, to the same place they were before the injury.
• The economic damages are less difficult to compute, as they rely on precise financial values.
• A lawyer may calculate the extent of losses suffered by the victim using hospital bills, pay stubs, and repair estimates.

Punitive Damages

• Punitive damages are concerned with punishment.
• They are designed to punish the offender and deter such wrong actions.
• Punitive damages do not have a standard formula.
• Courts consider the degree to which the bad behavior of the defendant was intentional and the degree of harm caused.
• In the majority of situations, the amount should be reasonable compared to economic losses.
• The U.S. Supreme Court has even proposed that, in most cases, punitive damages should not exceed compensatory damages (i.e., economic + non-economic) by more than a single-digit multiplier.

Can I Get Both Economic and Punitive Damages?

Yes. There are a few instances where you may have the two. The court can first give you the economic damages on the basis of your actual losses, and then you can get punitive damages in cases where the conduct of the defendant was very harmful or willful.

For example, when a trucking company compels its drivers to forego rest breaks, and the result of that is a big accident, the injured party might be compensated to cover both medical expenses (economic damages) and other forms of punitive damages (punitive damages).

Economic damages are common, but punitive damages are granted only when gross negligence or willful injury is strongly proven.

Final Thoughts

Economic and punitive damages can be monetary, though they have very different purposes in the justice system. These two types of damages can enable you to know what to expect in case you ever encounter a personal injury or property loss case.

Here's a Quick Recap

• Economic damages compensate the victims of actual, quantifiable financial losses such as medical expenses, lost earnings, and damages.
• Punitive damages are used to penalize the misconduct of wrongdoers.
• Economic damages rest on evidence and figures, and punitive damages are pegged on the severity of the wrongdoing.
• Occasionally, an individual can get both, although punitive damages are uncommon and strictly restricted by the judiciary.