Compensatory Damages

Payment to someone who has suffered harm, such as for loss of income, expenses incurred, property destroyed, or personal injury. In general, except for damages for Personal Injury, receipt of these payments is taxable. Recovery of a person's previously deducted expenses is taxable under the Tax Benefit Rule. Contrast with Double Damages.

Compensation for actual damages suffered by an injured party, awarded to make the party whole.
Example: Because of the broken lease, the lessor was awarded $100 a day in compensatory damages at the Market Rent. The award did not include special, exemplary, or liquidated damages.

A sum that compensates the injured party for injury only.

A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another.

Compensatory damages are intended to provide a plaintiff with the monetary amount necessary to replace what was lost and nothing more. They differ from punitive damages, which punish a defendant for his or her conduct to provide a deterrent to the future commission of such acts. To be awarded compensatory damages, the plaintiff must prove that he or she has suffered a legally recognizable harm that is compensable by a certain amount of money that can be objectively determined by a judge or jury.

See: damages.