What are "compensatory damages" awarded for?

Compensatory damages are specifically intended to reimburse a plaintiff for the actual losses they have suffered due to the defendant's actions. These damages are calculated to restore the injured party to the position they would have been in had the harm not occurred. They cover both economic losses, such as medical expenses, lost wages, and property damage, as well as non-economic losses, such as pain and suffering or emotional distress.

This focus on reimbursement for actual losses distinguishes compensatory damages from punitive damages, which are intended to punish and deter wrongdoing. Compensatory damages are grounded in the principle of making a plaintiff whole, rather than providing a financial gain or any incentive for litigation. Their purpose is solely to address the financial impact of the defendant's conduct on the plaintiff, rather than to create a profit or encourage further legal action.