When a court determines that a legal wrong has occurred, it must decide how to address the resulting harm. In many civil cases, the most common remedy is compensatory damages. These damages are intended to compensate the injured party for actual losses caused by the defendant’s conduct.

Understanding when and how courts award compensatory damages helps clarify what civil litigation is designed to accomplish.

The Purpose of Compensatory Damages

Compensatory damages are not intended to punish the defendant. Their primary goal is to restore the injured party to the position they would have occupied if the wrongful conduct had not occurred.

The focus is on measurable loss rather than moral judgment.

Economic Versus Non Economic Losses

Compensatory damages often include economic losses such as lost income, medical expenses, repair costs, or other quantifiable financial harm.

In certain cases, courts may also award non economic damages for losses that do not have a precise monetary value, such as pain, emotional distress, or loss of enjoyment of life.

Causation Must Be Established

A court will not award damages simply because a loss occurred. The plaintiff must demonstrate that the defendant’s conduct legally caused the harm.

This requires more than showing that the loss happened at the same time. The harm must be sufficiently connected to the wrongful act.

Damages Must Be Proven With Evidence

Compensatory damages must be supported by evidence. Courts require documentation, testimony, or expert analysis to establish the amount of loss.

Speculation or unsupported estimates are generally insufficient.

Limits on Recovery

Even when liability is established, recovery may be limited by contractual provisions, statutory caps, or principles such as comparative fault.

Courts apply these limitations to ensure that the award aligns with governing legal standards.

The Goal Is Restoration, Not Windfall

Compensatory damages aim to make the injured party whole, not to provide a financial windfall. The award should correspond to actual, provable loss.

This restorative principle distinguishes compensatory damages from other forms of relief such as punitive damages or equitable remedies.