What is the main difference between punitive damages and compensatory damages?

The distinction between punitive damages and compensatory damages lies fundamentally in their purpose and function within the legal system. Punitive damages are specifically intended to deter the defendant and others from committing similar wrongful acts in the future. They are awarded in addition to compensatory damages when a defendant's behavior is found to be particularly egregious, reckless, or malicious. The goal is not only to provide a financial remedy for the individual harmed but also to send a broader message that such behavior will incur significant penalties.

On the other hand, compensatory damages are aimed at reimbursing the plaintiff for actual losses experienced, whether those are related to medical expenses, lost wages, property damage, or pain and suffering. These damages are designed to restore the injured party to the position they were in before the harm occurred, rather than to punish the wrongdoer or deter future behavior.

Understanding this difference is crucial for anyone studying automobile adjuster practices since it informs how claims are assessed and the nature of various damages that may be claimed in litigation scenarios.