What is the purpose of compensatory damages?

Compensatory damages serve the specific purpose of refunding actual losses incurred by a plaintiff as a result of another party's actions or negligence. These damages are intended to restore the injured party to the position they would have been in had the harm not occurred. They encompass not only direct economic losses, such as medical expenses and lost wages, but also non-economic damages like pain and suffering. The core principle is to provide financial compensation that accurately reflects the loss endured, ensuring that the injured individual is made whole again as much as possible through monetary means. This fundamental objective distinguishes compensatory damages from punitive damages, which aim to penalize wrongdoing rather than merely compensate for losses.