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Compensatory Versus Punitive Damages: What Are the Differences?

Damages after Accident New Mexico

When people are injured in accidents caused by the negligence of other parties, such as car accidents, truck accidents, motorcycle accidents, pedestrian accidents, bicycle accidents, medical malpractice, nursing home abuse, and premises liability, they may be entitled to compensation that is commonly referred to as damages. The term “damages” simply refers to sums of money that are paid to compensate people for their injuries, expenses and other losses related to an accident.

Not all damages are the same. Some damages are intended to restore people to their state before their injuries, while other damages are awarded more to punish defendants for their conduct.

If you suffered serious injuries or your loved one was killed in any kind of accident caused by another party’s negligence, you will want to make sure that you pursue all the damages you are entitled to. If the conduct of the person who caused your injuries was particularly egregious, you could be eligible for significantly more money with the addition of punitive damages.

A lawyer will be able to determine whether you could receive punitive damages and will know how to prove to a court that you deserve them. Parnall Law has recovered more than $100 million in settlements and verdicts for over 5,000 clients. Call or contact us online now to receive a free consultation.

What Are Punitive Damages?

Punitive damages (also referred to as exemplary damages) are awards that are intended to punish defendants for particularly reprehensible conduct, rather than compensate victims for their losses.

To obtain punitive damages, a plaintiff must prove by clear and convincing evidence that a defendant engaged in reckless conduct, dishonest judgment, malicious conduct, willful conduct, or wanton conduct.

These terms are defined as follows under New Mexico Uniform Jury Instruction 13-1718:

  • Reckless Conduct — The intentional doing of an act with utter indifference to the consequences.
  • Dishonest Judgment — A failure by the insurer to honestly and fairly balance its own interests and the interests of the insured.
  • Malicious Conduct — The intentional doing of a wrongful act with knowledge that the act was wrongful.
  • Willful Conduct — The intentional doing of a wrongful act with knowledge that harm may result.
  • Wanton Conduct — The doing of an act with utter indifference to or conscious disregard for a person’s rights.

New Mexico Uniform Jury Instruction 13-1827 provides that punitive damages are meant to deter the wrongdoer or others from engaging in similar conduct. All aspects of the case must be considered fairly for punitive damages to be awarded. A jury is allowed to consider the property or wealth of a defendant, and any punitive damages award cannot be disproportionate to the circumstances.

What Are Compensatory Damages?

Compensatory damages are a financial award that is usually intended to make a person “whole” again. Any losses you incurred because of your accident should be compensated with compensatory damages. Compensatory damages are commonly divided into economic damages and noneconomic damages.

Economic damages are the tangible losses a victim has incurred or will incur, like medical bills, lost wages, and property damage. You can prove economic losses by tallying up your bills from medical treatment, property repair, therapy, and more.

Noneconomic damages refer to more subjective kinds of harm that cannot be as easily quantified, such as pain and suffering, loss of consortium, and emotional distress. Because these kinds of losses are intangible, there is not an objective number you can attach to them. However, a lawyer with experience in personal injury law will know how to evaluate how much money to demand for non-economic damages.

Differences Between Compensatory and Punitive Damages

Compensatory damages are intended to compensate a person for their losses. Punitive damages are intended to punish defendants. To determine the amount of compensatory damages owed, a court will evaluate the victim’s losses. To determine the amount of punitive damages owed, the court will evaluate the defendant’s conduct and wrongdoing.

When to Sue for Punitive Damages

Punitive damages are not available in every personal injury case. They can be sought only in cases where a defendant engaged in egregious conduct that merits an additional form of punishment.

One of the most common reasons for punitive damage awards are cases involving a person driving while intoxicated (DWI). Drivers operating under the influence of drugs or alcohol are often viewed by many juries as having knowingly placed people at risk, so defendants are much more likely to be punished in these cases.

If you are unsure whether punitive damages are an option in your case, ask your lawyer.

Can You Sue for Compensatory and Punitive Damages at the Same Time?

Yes. Courts generally require there to be some kind of relationship between compensatory damages and punitive damages. The punitive damages sought must relate to the losses caused by conduct of the defendant. They cannot be based on prejudice or passion. Punitive damages should not grossly exceed the amount of compensatory damages.

Most people with injury claims will be awarded compensatory damages, but not everybody receives punitive damages. A person cannot obtain punitive damages without being awarded compensatory damages.

New Mexico Law on Punitive Damages

In BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), the Supreme Court of the United States ruled that excessively high punitive damages violate the Due Process Clause of the Fourteenth Amendment.

However, “excessively high” is a subjective term, and the New Mexico Court of Appeals has allowed up to $13 million in punitive damages to be awarded in a single case. There is no specific cap on punitive damages in New Mexico. Rather, you must prove that the defendant’s conduct was grossly negligent or intentional to validate the damages you are seeking.

How Can Parnall Law Help Me?

Did you sustain serious injuries or was your loved one killed in an accident caused by another party’s negligence in the greater Albuquerque area? Do not expect insurance companies to make you a fair offer for your injuries without a fight. Make sure that you retain legal counsel as soon as possible.

Parnall Law has been helping residents and visitors to New Mexico for more than two decades. You can have our lawyer assess all of your legal options as soon as you call or contact us online to schedule a free consultation.