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|
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|
$100,000 or the amount of compensatory
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|
Table 1. States with Punitive Damage Limits.
|Not a bit||Very useful|