What is the primary difference between compensatory and punitive damages?

Compensatory damages and punitive damages serve different purposes within the legal framework. Compensatory damages are intended to make a plaintiff "whole" again following a loss, covering actual losses such as medical expenses, lost wages, property damage, and other measurable costs incurred due to another party's wrongful actions. This type of damage aims to provide restitution for the real economic loss that a victim has suffered.

On the other hand, punitive damages are not designed to compensate the victim for losses. Instead, they are imposed as a way to punish the wrongdoer for particularly egregious or reckless behavior and to deter similar conduct in the future. This distinction is crucial, as it reflects the legal system's dual objectives: to compensate victims and to discourage wrongful behavior.

The primary difference hinges on the intent behind the damages: compensatory damages address actual losses while punitive damages focus on punishment and deterrence.