insurance

Punitive Damages

Additional monetary compensation awarded by a court beyond actual damages to punish a defendant for particularly egregious or malicious conduct. These damages are intended to deter the wrongdoer and others from similar future behavior.

Example

“The jury awarded $50,000 in actual damages plus $200,000 in punitive damages after finding the insurance company deliberately denied valid claims in bad faith.”

Memory Tip

Remember 'PUNISH' - Punitive damages are meant to PUNISH bad behavior, not just compensate for losses.

Why It Matters

Punitive damages can significantly increase the total amount you might receive in a lawsuit, especially in cases involving insurance bad faith or gross negligence. However, many insurance policies specifically exclude coverage for punitive damages, meaning defendants must pay these amounts out of pocket.

Common Misconception

Many people believe all insurance policies will cover punitive damages awarded against their policyholders, but most liability policies explicitly exclude punitive damages. Additionally, people often confuse punitive damages with regular compensatory damages, not realizing that punitive awards are specifically meant to punish rather than just make the victim whole.

In Practice

Consider a car accident case where the defendant was texting while driving and caused $25,000 in medical bills and property damage. The court might award the $25,000 in compensatory damages plus an additional $75,000 in punitive damages due to the reckless texting behavior. While the defendant's auto insurance would likely cover the $25,000 in actual damages, they would personally owe the $75,000 punitive award since most auto policies exclude punitive damages coverage.

Etymology

From Latin 'punire' meaning 'to punish' and 'damnum' meaning 'loss' or 'harm,' reflecting the dual purpose of punishment and compensation in legal remedies.

Common Misspellings

punative damagespunitive damgespunnitive damagespunitive damagers

Related Terms

Compensatory Damages General Damages

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