What Is the Difference Between Compensatory & Punitive Damages?

When someone files a personal injury claim, the goal is to not only receive fair compensation for their injuries and damages but also to hold the liable person or party accountable for their negligent or wrongful actions. No matter how much compensation a person needs or what type of accident caused their injuries, many personal injury claims involve seeking compensation from someone who was negligent, sometimes egregiously so. In other words, personal injury claims seek compensation for preventable accidents in almost any setting, from car accidents caused by individuals to product liability issues caused by large companies.

However, not all personal injury claims stem from negligence. It is also possible to bring a lawsuit against someone (or an entity) who causes serious injury or death through intentional misconduct. One example of this would be a personal injury lawsuit brought against someone who committed the crime of aggravated assault with a deadly weapon. It is possible to seek financial compensation and work to hold the person responsible for their actions even though those actions were illicit, not negligent. In this example, the civil action would be entirely separate from any criminal proceedings that may take place.

While nearly all personal injury claims involve the pursuit of compensatory damages, punitive damages are typically reserved for cases involving egregious negligence or willful, intentional, or wanton misconduct. Below, we’ll explore these two categories of personal injury damages, including what they include and when they may be awarded.

What Are Compensatory Damages?

Compensatory damages include certain financial, physical, mental, and emotional losses that can be assigned a specific value. These are losses for which the victim can be compensated and typically involve things the victim had to spend money on or go into debt for as a result of their injuries.

Compensatory damages include the following:

• Medical expenses
• Lost wages/income
• Lost earning capacity
• Pain and suffering
• Mental anguish
• Property damage

While compensatory damages are commonly associated with physical injuries, they can also cover less obvious losses. For example, a person might be able to receive compensation because of post-traumatic stress disorder symptoms that interfere with their life.

Additionally, compensatory damages do not only refer to things the victim has already experienced or paid for as a result of their injuries but also future projected losses, such as future medical care costs, future lost income due to an impairment or disability, and future emotional distress resulting from the injury-causing event.

What Are Punitive Damages?

Punitive damages, also known as exemplary damages, are very different from compensatory damages. When someone seeks punitive damages, they’re seeking a monetary award that’s meant to serve as punishment for the other party’s negligent or wrongful behavior.

In general, punitive damages are rarer than compensatory damages, but they are more common when a person’s excessively negligent or illegal behavior caused someone else’s injuries. Punitive damages are a separate punishment from any criminal penalties the defendant might face. In fact, many instances of punitive compensation don’t involve someone facing a criminal trial at all.

Courts use punitive damages for many reasons. An award of punitive damages can help make sure a plaintiff receives a fair amount of compensation and accounts for losses that aren’t explicitly covered by current laws. Such an award also helps reduce the number of cases in the criminal justice system. And, of course, these awards hold responsible parties accountable and help to deter others from committing similar acts by sending a message that such actions will not be tolerated.

Are Punitive Damages Constitutional?

Due to the “punishing” element inherent in punitive damages, there has been some debate regarding the constitutionality of punitive damages within the scope of tort law. After all, the primary aim of tort law is to provide affected parties with relief for injuries and losses caused by the careless, reckless, and wrongful conduct of others. Meanwhile, the criminal justice system’s main goal is to punish those who violate the law. However, courts have upheld the constitutionality of punitive damages, emphasizing the difference between penalties imposed by and paid to the state or federal government and damages paid to individual plaintiffs.

Most—but not all—states allow punitive damages in personal injury and wrongful death claims. As of 2023, exemptions include Michigan, Nebraska, and Washington, as well as Puerto Rico. Additionally, punitive damages tend to go hand-in-hand with compensatory damages. If a jury does not award compensatory damages in a given case, the court will likely overturn any punitive damages awarded in that case.

How Common Are Punitive Damages?

Punitive damages are relatively uncommon. Only about 5% of all civil lawsuit verdicts involve an award of punitive damages, according to recent statistics. That being said, the Texas Supreme Court allows for punitive damages in any case in which gross negligence can be proven. This is particularly true for cases involving gross negligence by a corporation. According to the Texas Supreme Court, “[a] corporation is liable for punitive damages if it authorizes or ratifies an agent’s gross negligence or if it is grossly negligent in hiring an unfit agent.”

When Are Punitive Damages Awarded?

The awarding of punitive damages is essentially entirely up to the judge and/or jury involved in the case. Although these damages are allowed under Texas law, they are rarely awarded, and anyone who believes they may be entitled to such damages should work with a knowledgeable attorney with a strong track record of securing punitive damages on behalf of injured clients.

In many cases, the court will consider public policy implications when deciding whether to award punitive damages. For example, if an auto manufacturer is found to have acted with gross negligence in allowing a defective vehicle to market, resulting in numerous injuries and deaths, the court may choose to “send a message” to the liable auto manufacturer and others that such conduct will not be tolerated. Such an award could also be used to ensure that other auto manufacturers do not engage in similar practices that put the public at risk. The degree to which the liable party’s behavior is considered morally reprehensible or objectively “wrong” may play a significant role in the court’s decision to award punitive damages to the plaintiff. In this way, punitive damages are often aligned with the values of society as a whole.

Are Compensatory or Punitive Damages Capped in Texas?

In general, Texas does not “cap,” or limit, the amount one can recover in compensatory damages except in certain situations. This includes cases involving medical malpractice and claims against the state.

In these instances, the following limits apply:

• Medical Malpractice: In medical malpractice cases against doctors or healthcare providers in Texas, non-economic compensatory damages (e.g., pain and suffering or emotional distress) are limited to $250,000. Additionally, in cases involving multiple defendant healthcare facilities, each facility can only be sued for $250,000 with the total amount for all involved facilities not exceeding $500,000.
• Claims Against the State: In Texas, claims against the state for bodily injury are capped at $250,000 per person and $500,000 per injury-causing event, regardless of the number of claimants. In cases involving property damage, claims are limited to $100,000 total.

Texas also imposes certain limitations for punitive damages. Specifically, punitive damages cannot be greater than two times the amount of economic damages plus non-economic damages (not to exceed $750,000) OR $200,000, whichever is greater.