What do compensatory damages represent?

Compensatory damages are designed to restore an injured party to the position they would have been in had the injury not occurred. They represent the actual monetary consequences of a loss or injury, thus directly relating to the extent of loss experienced by the damaged party. This can include reimbursement for lost income, medical expenses, property damage, and other losses that can be quantified financially.

The concept of compensatory damages is rooted in the principle of making the injured party "whole" again, focusing on actual harm suffered rather than punishing the wrongdoer. Thus, it reflects the financial impact of the harm and provides a measure for the compensation required to address that specific loss.