What is the primary characteristic of compensatory damages?

Compensatory damages are primarily designed to reimburse the injured party for actual losses incurred as a result of a wrongful act. This concept is central to the function of compensatory damages—they are meant to restore the plaintiff to the position they would have been in had the harm not occurred.

For instance, if an individual suffers physical injuries due to someone else's negligence, compensatory damages might cover medical expenses, lost wages, and pain and suffering related to the injury. This direct correlation between the damages awarded and the actual losses sustained is what distinguishes compensatory damages from other types, such as punitive damages, which are intended to punish the wrongdoer rather than make the injured party whole.

By focusing on the real and quantifiable impacts of the defendant's actions, compensatory damages ensure that victims receive appropriate financial restitution for their specific losses.