Punitive damages, also known as exemplary damages, are awarded in addition to compensatory damages. Compensatory damages are intended to cover the plaintiff’s actual monetary losses while punitive damages are meant to punish the defendant's behavior and to deter the defendant and others from committing similar acts in the future. In addition to serving as a punishment for the defendant, punitive damages also can serve as a way to help compensate the plaintiff for intangible losses.
Punitive damages can be awarded by a Judge or Jury if it is proven that the defendant intentionally inflicted injury or harm on the plaintiff, or showed reckless disregard to the plaintiff’s safety and rights. Compensatory damages are awarded to compensate the plaintiff for any actual monetary loss that may have occurred due to the intentional or negligent actions of another. Therefore, there is an exact basis to determine the amount of the compensatory damages to be awarded. Unlike compensatory damages, there is no exact basis for the amount of punitive damages to be awarded which makes the calculation of the award difficult to predict and highly controversial.
Many states have established strict rules which limit when punitive damages can be awarded and have placed caps on the total amount of the award. The amount is often calculated by multiplying against the total compensatory damage award.
Read the details regarding punitive damages from the Office of Code Revision Indiana Legislative Services Agency: