What are punitive damages?
Punitive damages, also known as exemplary damages, are one of the three major types of damages that can be awarded in a lawsuit, along with specific and general compensatory damages.
Unlike compensatory damages, which are intended to reimburse injured victims for their economic losses and their pain and suffering, punitive damages are sometimes imposed in a suit when the defendant has exercised gross negligence and lack of care for the safety of other people. The effect sought by punitive damages is to make an example out of the defendant.
The Punitive Damages Debate
Punitive damages are very controversial in America and there has been an ongoing debate about whether their application is fair. While some people emphasize the excessiveness and arbitrariness of punitive damages, others point to the fact that they are awarded in only two percent of the civil lawsuits, and that, despite some multi-million dollar verdicts, the average punitive damage award is around $50,000.
Many states have imposed limits on punitive damages (see Table 1), while others, such as
Connecticut, New Hampshire, Louisiana, Michigan, Massachusetts, Washington, and Nebraska have prohibited punitive damages either by statute or by common law.
| State | Punitive Damage Caps |
|---|---|
| Alabama |
Three times compensatory damages or
$500,000 in non-bodily injury suits;
Three times compensatory damages or $1.5 million - in bodily injury cases |
| Alaska | Three times compensatory damages or $500,000 |
| Colorado | Not to exceed compensatory damages |
| Connecticut | Not to exceed two times compensatory damages in product liability cases |
| Florida | Three times compensatory damages or $500,000 |
| Georgia | $250,000 (cap does not apply to product liability cases) |
| Indiana | $50,000 or three times compensatory damages |
| Kansas | The defendant's annual earnings or $5,000,000 |
| Nevada | $300,000 or three times compensatory damages (cap does not apply to product liability, discrimination, toxic torts, and defamation suits) |
| New Jersey | Five times compensatory damages or $350,000 (discrimination, bias crimes, sex abuse, drunk drivers cases are exempt) |
| North Carolina | Three times compensatory damages or $250,000 |
| North Dakota | Two times compensatory damages or $250,000 |
| Oklahoma |
$100,000 or the amount of compensatory
damages awarded;
If the defendant acted 'with malice' - two times compensatory damages or $500,000 |
| Texas | $200,000 or two times economic damages plus non-economic damages up to $750,000 |
| Virginia | $350,000 |
Table 1. States with Punitive Damage Limits.
| Not a bit | Very useful |
- What is absolute liability?
- Is liability insurance a good method of risk management?
- What are the characteristics of the law of strict liability and strict liability torts?
- What is medical malpractice liability insurance?
- What is the Sarbanes-Oxley Act of 2002?
- What qualifies as an intentional tort?
- What legal duty of care does a property owner owe trespassers, licensees and invitees?
- What is a tort?
- What are the characteristics of the tort liability law and tort claims?
- What is the difference between a tortfeasor, a plaintiff and a defendant?
- What is strict liability?
- What is vicarious liability?
- How does liability insurance protect me against legal liability?
- What are the required elements of negligence claims?
- How does professional negligence insurance work?
- What are the special and general compensatory damages?
- What do parental liability and the dram shop liability law have in common?
- What is public liability insurance?
- How can I get a public liability insurance quote?
- What is product liability?