What type of damages compensates an individual for actual financial losses incurred?

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Compensatory damages are designed specifically to reimburse an individual for actual financial losses they have incurred. This type of damage is intended to make the injured party "whole" again by covering quantifiable economic losses such as medical expenses, lost wages, property damage, and any other costs directly resulting from an incident.

The focus of compensatory damages is to reflect the real-world impact of the injury in terms of monetary value, ensuring the claimant receives compensation that corresponds to the actual detriment they faced. Thus, if an individual suffers a financial loss due to someone else’s actions, compensatory damages serve to address and remedy that financial hardship.

In contrast, the other types of damages listed have different purposes. Punitive and exemplary damages are intended to punish the wrongdoer and deter future misconduct, rather than to compensate the injured party. General damages often refer to non-economic losses, such as pain and suffering, which do not have a direct monetary value like compensatory damages do. Understanding these distinctions helps clarify why compensatory damages are the appropriate answer for compensating actual financial losses.

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