DEFINITION of 'Compensatory Damages'

Money awarded to a plaintiff to compensate for damages, injury, or another incurred loss. Compensatory damages are awarded in civil court cases where loss has occurred as a result of the negligence or unlawful conduct of another party. To receive compensatory damages the plaintiff has to prove that a loss occurred, and that it was attributable to the defendant. The plaintiff must also be able to quantify the amount of loss in the eyes of the jury or judge.

BREAKING DOWN 'Compensatory Damages'

Compensatory damages differ from punitive damages, which may compensate over and above any loss or damage incurred and are meant to provide an incentive against repeating the act that caused the plaintiff's loss or damages.


Cases related to compensatory and punitive damages are a major source of debate in the field of health insurance, as proponents of tort reform claim that excessive damages above the actual loss incurred increase the overall cost of healthcare.

RELATED TERMS
  1. Punitive Damages

    Legal recompense that is levied as punishment for a wrong or ...
  2. Covenant Not To Execute

    A lawsuit agreement in which the plaintiff agrees not to execute ...
  3. Unintentional Tort

    A type of unintended accident that leads to injury, property ...
  4. Contractors' All Risks (CAR) Insurance

    An insurance policy that provides coverage for both damage to ...
  5. Water Damage Insurance

    A type of protection provided in most homeowners insurance policies ...
  6. Joint And Several Liability

    When multiple parties can be held liable for the same event or ...
Related Articles
  1. Taxes

    The Real Cost Of Natural Disasters

    Earthquakes, hurricanes, oil spills and other disasters have a very real cost, but who foots the bill?
  2. Investing

    DuPont Ordered to Pay $10.5M Over Leaked Chemical

    DuPont stock was down Thursday after the company was ordered to pay an additional $10.5M in a lawsuit related to a chemical leak.
  3. Insurance

    How Much Will Hurricane Sandy Cost Insurance Companies?

    Hurricane Sandy's economic cost is staggering, but insurance companies will be paying out less than you might think.
  4. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  5. Taxes

    Cut Taxes By Reporting Property Damage

    Know the options you have for your insured property if and when a disaster strikes.
  6. Insurance

    How Does Your Homeowners Insurance Handle A Downed Tree?

    A downed tree can happen at any time due to a storm or old age. But when it falls, will your insurance cover it?
  7. Taxes

    7 Sources Of Nontaxable Income

    All income in the United States is taxable, unless a provision specifically excludes it. Here are seven of those exceptions.
  8. Insurance

    The Importance Of Property Insurance

    Property insurance is important, but there's a lot you need to learn in order to get the proper coverage.
  9. Investing

    Net Sales

    Net Sales is an accounting term used to analyze a company's performance. It is the sales revenue that remains after deducting for product returns, damaged or missing products, and discounts. ...
  10. Managing Wealth

    How to Financially Prepare for a Hurricane

    Insurance isn't enough: How to ensure that you're ready financially for a natural disaster.
RELATED FAQS
  1. What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider ... Read Answer >>
  2. Does homeowners insurance cover tree damage?

    Discover how damage to a home from fallen trees is covered under your homeowners insurance policy if it happens suddenly ... Read Answer >>
  3. Suppose my garage collapsed onto my car. Are damages covered by my home insurance ...

    Generally, damage to an automobile will be covered by comprehensive car insurance, which is in addition to collision coverage ... Read Answer >>
  4. What is the difference between legal liability and public liability?

    Discover the differences between a general legal liability, a specific public liability and a professional indemnity in the ... Read Answer >>
  5. Does homeowners insurance cover termites?

    Learn why termite damage is typically excluded from homeowners insurance policies and how you can take steps to prevent damage ... Read Answer >>
  6. Does homeowners insurance cover fires?

    Understand if your homeowners insurance policy covers fire damage so you can protect what is likely to be your most valuable ... Read Answer >>
Hot Definitions
  1. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  2. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  3. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  4. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  5. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  6. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
Trading Center