Compensatory damages, including economic and noneconomic damages, are the most common damages awarded in a lawsuit. Courts may also award punitive damages to punish misconduct. Plaintiffs can also obtain injunctive relief, which is a court-ordered action or prohibition.

Economic Damages

Economic damages are the amount of money that will fairly and adequately compensate a plaintiff for measurable losses of money or property caused by the defendant’s fault. Economic damages include reimbursement for such items as medical expenses, lost wages or other income, and property damage.

Non-Economic Damages

Non-economic damages are intended to provide monetary relief for aspects of loss and harm that cannot be precisely measured. They can include recovery for such things as pain and suffering, emotional distress, loss of companionship or consortium, and loss of enjoyment of life. Given the highly subjective nature of non-economic damages, and the significant public policy implications of rising awards, about two-thirds of state legislatures have adopted reasonable limits on such awards either in medical negligence or all personal injury cases.

Punitive Damages

Punitive damages may be awarded against a defendant whose conduct was particularly egregious. These damages are not intended to compensate a plaintiff for an injury, but are used to punish the defendant and deter future similar activity. Punitive damages may be awarded when the defendant acted with actual malice toward the plaintiff, showed deliberate indifference or reckless disregard for the safety of others, or committed fraud. Most states require juries to find “clear and convincing” evidence of such misconduct to support an award of punitive damages, a standard that is stricter than the “preponderance of the evidence” standard ordinarily used in civil trials but not as strict as the “ beyond a reasonable doubt” standard required for criminal convictions.

Who pays lawsuit damages?

A significant portion of lawsuit awards against companies are paid by their insurers where they have insurance policies, but businesses also incur expenses. Most insurance coverage has a policy limit, awards above which must be covered by the business. Small businesses, on average, directly cover about a quarter of their litigation costs. This does not include the higher insurance premiums paid once a business faces litigation.