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What Are The Two Types Of Compensatory Damages?

Last updated: November 18, 2023

When a person or entity's negligent actions inflict loss or harm on another, the injured party often seeks justice and reparation. This is where compensatory damages come into play.

At its most basic level, compensatory damages represent a monetary sum awarded to a plaintiff in a legal case. The primary intent is to compensate the injured party for the loss, injury, or harm they suffered due to the defendant's actions. 

In essence, compensatory damages aim to make the plaintiff "whole" again, striving to restore them financially, emotionally, and physically to the state they would have been in if the harm had not occurred.

Purpose of Compensatory Damages

So, what's the underlying motive behind these damages? The primary purpose is to alleviate the financial burden the plaintiff may endure due to losses, such as medical bills, property damage, or loss of income, all of which stem from the defendant's negligent or intentional actions. However, compensatory damages go beyond tangible losses, aiming to compensate for the mental and emotional suffering that often accompanies personal injuries or wrongful actions.

The Two Types of Compensatory Damages

Within the broad spectrum of the legal landscape, compensatory damages bifurcate into two main categories: general compensatory damages and special compensatory damages.

General Compensatory Damages

General compensatory damages, often known as non-economic damages, are typically awarded for non-monetary losses that cannot be easily quantified or assigned a dollar value.

Non-Economic Losses

These include pain and suffering, emotional distress, loss of enjoyment of life, and loss of consortium or companionship. For example, a severe car accident may leave a victim with physical pain and emotional trauma that affect their daily activities and relationships. These are non-economic losses.

Special Compensatory Damages

On the other side of the coin are special compensatory damages. Unlike their general counterpart, special damages cover monetary losses directly resulting from the harm done.

Medical Expenses

Medical expenses comprise a significant portion of special compensatory damages. When a plaintiff suffers physical injury due to another's negligence, the resulting medical expenses can be astronomical. These costs can cover a wide range of treatments, including but not limited to, emergency room visits, surgeries, rehabilitation, physical therapy, medication, and any necessary medical equipment.

Moreover, future medical expenses are also taken into account. If an injury causes long-term or permanent damage, the victim may require ongoing medical care. This could involve regular medical check-ups, further surgeries, long-term medication, and even home care. Therefore, the court considers not just the current medical bills, but also the estimated cost of future medical care, ensuring that the victim doesn't bear the financial burden of these future expenses.

Loss of Earnings

Special compensatory damages also covers the loss of earnings, a significant financial setback for any individual. The impact of an injury can lead to a person being unable to work for some time. This includes the wages lost during the recovery period and any future loss of income if the person cannot return to their previous job due to their injuries.

Moreover, if the injury leads to a disability that reduces the individual's earning capacity, special damages can also cover this loss. An economist or financial expert might testify on this matter, estimating the potential lifetime earnings the person could have made if not for the injury. This loss of earning capacity is a crucial component of special damages, attempting to compensate for a potential lifetime of reduced earnings.

Determining Compensatory Damages

The process of determining compensatory damages is intricate and multifaceted. It involves a thorough analysis of a multitude of factors, as well as relying heavily on expert testimonies.

Courts meticulously review the specifics of the case, considering factors like the severity and nature of the injury, the extent of the defendant's negligence, the impact on the plaintiff's quality of life, and any financial losses incurred. They also take into account the plaintiff's age, health condition before the incident, and their earning capacity.

Expert witnesses play a significant role in this process. Medical professionals can provide insights into the extent of the injury and the cost of future medical care. Economists or financial experts can offer valuable input on the financial impacts of the injury, including lost earnings and future earning capacity. This comprehensive process aims to ensure a fair and just compensation that adequately covers the damages suffered by the victim.

Factors Considered

Factors taken into account often include the severity of the injury, the degree of negligence on the defendant's part, the economic impact on the victim, and the victim's age, health condition, and earning capacity before the incident.

Calculation Process

Calculating compensatory damages is a complex task that requires a detailed and comprehensive approach. Unlike many areas of law, there is no universal formula that can be applied to every case. The reason for this is simple: every case is unique, and the amount of damages awarded should reflect the specific circumstances and injuries the victim suffers.

The courts typically consider a variety of factors when calculating compensatory damages. They often utilize specific formulas, but these can vary significantly depending on the case. For example, the court might consider the cost of medical treatment, the severity of the physical injury, the mental trauma endured by the victim, and the overall impact on the victim's life.

Expert testimonies can also play a crucial role in determining the amount of compensatory damages. Medical professionals may testify about the extent of the victim's injuries and the cost of future medical care. Economists might be brought in to evaluate the financial impact, including loss of earnings and diminished future earning capacity.

Furthermore, the court reviews documentary evidence such as medical and bills, employment records, and other relevant documents that can substantiate the plaintiff's claim for damages. This thorough examination of evidence ensures that the award reflects the actual losses suffered by the victim.

Limitations of Compensatory Damages

Despite their vital role in the justice system, compensatory damages come with limitations. These constraints are important to understand as they can significantly impact the final award in a personal injury case. 

For instance, calculating these damages often relies heavily on subjective assessments, which can lead to a certain degree of variability in the outcomes. Furthermore, existing legal caps or upper limits on certain types of compensatory damages may also limit the amount a plaintiff can receive, regardless of the actual extent of their suffered losses.

Caps on Damages

One of the most notable limitations is the cap or upper limit on certain types of compensatory damages. Some jurisdictions have laws that place a maximum limit on the amount that can be awarded for non-economic damages, such as pain and suffering or emotional distress.

These caps were introduced to control the potential for excessively large awards that could have devastating financial consequences for defendants and insurance companies. However, these limits are not universal and can vary significantly from one jurisdiction to another. Therefore, it's essential to understand the specific laws applicable in your area.

Difficulty in Calculation

Another significant limitation of compensatory damages is the inherent difficulty in quantifying certain types of losses. Non-economic damages, such as pain and suffering, loss of enjoyment of life, or emotional distress, are inherently subjective and difficult to measure in monetary terms.

Assigning a dollar value to these intangible losses often involves much subjectivity, resulting in inconsistencies between different cases. Moreover, the court must rely on the plaintiff's personal account and expert testimonies, which may not always provide a clear-cut assessment of these losses.

Despite these challenges, compensatory damages remain an integral part of the legal system. They provide a mechanism for victims to receive financial compensation for their losses and help restore their lives to the state they were in before the harm occurred.

Tips for Navigating Compensatory Damages

  • Documentation is Key: Maintain comprehensive records of all costs and losses associated with the injury, including medical bills, loss of earnings, and out-of-pocket expenses.

  • Consider Future Costs: Don't overlook potential future costs, such as ongoing medical treatment or reduced earning capacity.

  • Legal Representation Matters: Hire an experienced personal injury attorney who understands the complexities of calculating and negotiating compensatory damages.

  • Understand the Limitations: Be aware of any caps on compensatory damages in your jurisdiction.

  • Settlement Consideration: Before accepting a settlement offer, ensure it adequately covers both your current and future damages.

Frequently Asked Questions

1. What exactly do compensatory damages intend to cover in a legal case?

Compensatory damages are designed to cover the victim's losses, both tangible and intangible, caused due to the defendant's negligent or intentional actions. The goal is to return the victim to the position they were in prior to the incident.

2. Can you elaborate on the difference between general and special compensatory damages?

General compensatory damages cover non-monetary losses like pain and suffering or emotional distress, which don't have a direct cost. Special compensatory damages, on the other hand, compensate for quantifiable financial losses such as medical bills and loss of earnings.

3. What makes the calculation of compensatory damages complex?

The complexity arises from the subjective nature of some elements like pain and suffering, and the need to forecast future costs such as ongoing medical care or lost future earnings, which require expert testimonies.

4. What are some key factors considered when awarding compensatory damages?

Key factors include the nature and severity of the injury, the economic impact on the victim, the degree of defendant's negligence, and the victim's age, pre-injury health condition, and earning capacity.

5. What should one understand about the limitations or caps on compensatory damages?

It's crucial to know that some jurisdictions impose limits on certain types of compensatory damages, primarily non-economic damages. These caps are in place to avoid excessively large awards.


Understanding the nuances between general and special compensatory damages is integral to comprehending how victims are made whole in the legal system. While compensatory damages aren't perfect, they serve a crucial role in our justice system, providing a pathway for victims to receive financial and emotional reparation for their losses.

Read more about what personal injury lawyers do for people who have suffered through injuries or accidents at work from our blogs at Disability Help.

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Chloe Powers
Chloe works with policymakers on behalf of Disability Help to support their work at a strategic level, ensuring the conditions are in place for creative individuals and organizations to grow, reach their potential and effect relevant, sustainable change.
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