How Punitive Damages Work

You’ve probably heard of punitive damages before, most likely through a high-profile verdict against a defendant who is seen by the public as having deep pockets. Punitive damages are controversial because the purpose of a civil action is to compensate the plaintiff, not to punish the defendant. Punishment of defendants is usually reserved for the criminal courts. However, punitive damages are intended to do just that–to punish the defendant when their behavior has been particularly vicious by awarding the plaintiff monetary awards that are greater than the amount necessary purely for compensation.

To understand how punitive damages work, we’ll need to take a quick look at how damages are awarded in a civil lawsuit.

Compensatory Damages

Compensatory damages are simply designed to compensate the plaintiff for the harm he or she sustained in the events giving rise to the litigation. There are two major forms of compensatory damages: special compensatory damages and general compensatory damages.

 

  • Special compensatory damages: These are damages that are designed to compensate the victim for monetary expenses suffered as a result of an injury. As such, they are specific to the plaintiff and the unique situation he finds himself in. Examples of special compensatory damages are medical bills, cost of future medical care, loss of wages, loss of future wages, etc.
  • General compensatory damages: These types of damages are designed to compensate a victim for the non-monetary harm he incurred. Unlike special damages, they focus on harm that is “generally” incurred in an injury and they are often difficult to quantify. Some examples of general compensatory damages include pain and suffering, mental anguish, and loss of consortium.

Punitive Damages

While compensatory damages are designed to make the plaintiff whole again, punitive damages are intended to punish the defendant. They are awarded most often in cases where the defendant’s misconduct was willful or malicious, such as in cases of fraud, intentional torts, and insurance bad faith. One very famous example of a punitive damages award is the Ford Pinto case. In that case, Ford discovered a defect in the gas tanks of its Pinto line of vehicles that caused them to explode when the cars were struck from the rear. At trial, it was discovered that Ford knew about this defect, but determined through cost-benefit analysis that it would be cheaper to pay settlements to the families of those killed by the defect than it would be to recall the entire line and fix it. Due to this wanton disregard for their customers’ safety, the jury awarded the plaintiffs $125 million in punitive damages (which the judge later reduced to $3.5 million).

Punitive Damages in Georgia

Because punitive damages awards could reach potentially astronomical amounts depending on the conduct of the defendant, state legislatures have imposed limits on juries’ ability to award them. In Georgia, punitive damages awards for defective products and intentional torts have no cap, although 75% of the amount of the award must be paid to the state. For all other actions, punitive damages are capped at $250,000.

Contact an Atlanta Insurance Bad Faith Attorney
If you’ve been injured by the intentional act of someone else or believe you’ve been the victim of insurance bad faith, you deserve the the maximum damages award you’re entitled to, which may include punitive damages. Contact the attorneys at Slappey & Sadd for a free consultation to discuss your case by calling 404.255.6677. We serve the state of Georgia, including the communities of Atlanta, Marietta, Sandy Springs, Decatur, and all points beyond.

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