In any lawsuit, the plaintiff makes a claim for damages, which is essentially a demand for money to cover the losses incurred. In some cases, a claim can also be made for punitive damages, which are intended to "punish" the negligent party, and are not related to a loss suffered by the plaintiff.
Anyone who's been harmed by another party's negligence is entitled to claim two types of compensation:
The economic component is objective and includes monetary losses: medical expenses, lost wages, and loss of business opportunities.
On the other side, the noneconomic component is subjective and involves the evaluation of pain, suffering, inconvenience, affected companionship and emotional distress.
In some cases, additional damages can be imposed. They are intended to punish the wrongdoer rather than to compensate the victim. These are the "punitive damages."
Punitive damages are damages in excess of those required to compensate the plaintiff for the wrong done, which have to be paid if the defendant's behavior is classified as an obvious attempt to voluntarily cause harm. Also known as "exemplary damages", punitive damages have a double objective:
Punitive damages are most of the times restricted to tort cases, including a wide range of personal injury cases such as:
Courts will not award punitive damages in contract cases, except for those situations that involve a dispute over coverage under an insurance contract. In an insurance case, the court can award punitive damages only if the plaintiff shows that the insurance company broke the good faith with malicious behavior when breaching the insurance contract.
There is a basis for punitive damages in case the following evidence is available:
Although the Supreme Court has not offered a specific formula for the courts' to follow when calculating punitive damages, they stated that punitive damages are considered unconstitutional if they are disproportionate and unreasonable. However, The Court has made it somewhat clear that in practice, very few cases will justify awarding a ratio higher than a one digit between compensatory damages and punitive damages. In other words, if the plaintiff's actual damages are $20,000, a supplementary award of $200,000 in punitive damages would generally be accepted as unreasonable and disproportionate, unless the case was unacceptably flagrant.