What distinguishes punitive damages from compensatory damages?

Punitive damages are designed to serve a specific purpose beyond merely compensating the plaintiff for their losses; they aim to punish the defendant for their wrongful conduct and deter others from engaging in similar behavior. When a court awards punitive damages, it recognizes that the defendant's actions were not just negligent or harmful, but egregious or malicious, warranting an additional financial penalty.

This focus on punishing and deterring wrongful behavior sets punitive damages apart from compensatory damages, which are primarily intended to reimburse individuals for actual financial losses, such as medical expenses or lost wages. Understanding this distinction is vital, particularly in the context of legal systems, as it clarifies the nature of the penalties imposed on wrongdoers and the intended outcomes of various types of damages.