What Is the Difference Between Damages and Compensation?

You may have heard the phrase, “If you have been injured, you could be entitled to compensation” and wondered what it means. Like many personal injury and legal terms, you may be familiar with the term compensation, but you may not completely understand its legal implications.

To make matters more complicated, another legal term, damages, is often used synonymously or within the context of compensation when describing personal injury claims and other civil actions.

What’s the Difference Between Damages and Compensation?

First of all, what are damages? Put simply, damages are a legal remedy — usually in the form of money — paid by the court in a civil action to compensate an injured party for their loss, injury or suffering. In order for an injured party to be awarded damages for their injuries, they must show that a breach of duty or some form of negligence has occurred and caused some type of mental or physical injury.

Damages and compensation are often used together or interchangeably in the context of civil litigation, and there is not a true difference between the two terms. Like damages, compensation is money paid to an injured party that attempts to make amends (or in some cases attempts to make the person “whole”). Some types of damages do more than just compensate for loss or injury, which is the primary distinction between the two terms.

Types of Damages

There are generally two types of damages: compensatory and punitive.

  • Compensatory damages – Damages paid to compensate an injured party for loss, injury or harm suffered as a result of the negligence of another. When the court determines compensation, they often look at lost wages, medical bills related to the injury, cost of repair to damaged property and costs associated with materials used to heal the injury. In some cases, an injured party may receive compensation for emotional distress and pain and suffering.
  • Punitive damages – Damages awarded to punish the negligent party. Punitive damages are typically awarded when the injured party can prove that the defendant’s negligence was intentional. Often controversial, certain rules dictate how and when punitive damages will be awarded while some states do not allow punitive damages at all.

Other forms of damages are available as well, including nominal damages (awarded when there is no proof of harm), liquidated damages (damages assigned when a contract is initially formed), and speculative damages (damages that have not yet occurred).

How Can an Attorney Help Recover Compensation for Injuries?

When one party’s negligence results in injury to another, the injured party potentially suffers loss in a variety of ways. Injured parties have the legal right to pursue damages to recover those losses. Knowledgeable, experienced personal injury attorneys will do what it takes to investigate an injured person’s case to seek the compensation that they deserve.

Common types of damages recoverable in a personal injury case may include:

  • Medical bills and expenses
  • Pain and suffering
  • Lost wages
  • Loss of ability to earn
  • Scarring and disfigurement

When someone’s negligence results in the death of another person, family members of the person killed may recover damages for the wrongful death of their loved one. Wrongful death damages may include medical expenses incurred prior to death, conscious pain and suffering prior to death, loss of the economic support of the loved one, loss of the companionship of the loved one, and funeral expenses.