What Is the Difference Between Compensatory and Punitive Damages in North Carolina?

Key Highlights 

• To know what is the difference between compensatory and punitive damages in North Carolina is that compensatory damages are intended to reimburse the injured party for their losses (e.g., medical expenses and pain), while punitive damages are “extra” awards that are given as punishment for particularly egregious conduct, such as fraud or willfully malicious activity. 
• Compensatory damages can include financial losses that can be measured in an exact dollar amount, as well as more subjective forms of damages such as emotional distress and pain and suffering. 
• There is normally no cap on compensatory damages; however, punitive damages are capped at three times your compensatory award or $250,000, whichever is larger (with a few exceptions, such as in a drunk driving case). To pursue a claim for either type of damage, you must file within 3 years.
• North Carolina has an extremely strict rule of fault: if the insurer can prove that you were even 1% at fault for the accident, you will be entirely precluded from recovery of any compensation whatsoever.

Injured in an accident in North Carolina? One of the first questions you’ll likely ask is “How much money am I able to recover for my injury?” Understanding what is the difference between compensatory and punitive damages in North Carolina is an important first step in determining the value of your injury case, and the answer will depend upon the particular facts of your case.

At Tatum & Atkinson Law Firm, we represent individuals in North Carolina who have been injured. Every day, we understand that the confusion regarding damages is normal. The North Carolina civil damages law distinguishes very clearly between compensatory damages and punitive damages. Knowing the difference between the two types of damages can greatly affect the overall value of your case and how it should be pursued.

For a free consultation, please contact us at (800) 529-0804. We work on a contingency fee basis, which means that you do not have to pay us unless we recover money for you. 

What Is the Difference Between Compensatory and Punitive Damages in North Carolina? 

To explain it plainly, compensatory damages North Carolina replace what the victim lost, and punitive damages punish a defendant for their actions. Most, if not all, cases in North Carolina for injury have a possibility of receiving compensatory damages. A smaller number of cases, only those where there is either fraud, malice, or willful or wanton behavior, may allow for punitive damages. 

There are different levels of proof for compensatory vs punitive damages North Carolina; they are not calculated in the same manner and are subject to different tort caps. Your attorney needs to help you determine where your case falls on this continuum for purposes of developing your strategy.

“Compensatory and punitive damages are two entirely different battlefronts; if you cannot fight for both when necessary, you will miss out on money!” – Robert Tatum, Founding Attorney 

Compensatory Damages in North Carolina: Making the Victim Whole

The word “compensatory” originates from the Latin word, which translates as “equalize,” and this is really what these types of damages are intended to accomplish. According to the North Carolina personal injury law framework, compensatory damages exist to restore an injured party to their prior condition as reasonably as possible through the vehicle of financial compensation.

Compensatory damages come in two distinct forms: economic (also referred to as ‘special’) damages and non-economic (which may be called general) damages.

Economic Damages: Losses with a Dollar Figure

Economic damages are losses that can be calculated accurately through bills, pay stubs, invoices, and expert testimony. Economic North Carolina personal injury damages include:

• Medical expenses (past and future treatment, including surgery, therapy, and prescription medications); 
• Lost wages and reduced earning potential in the future;
• Damaged property caused by a car accident (often vehicle repairs); 
• The cost to modify your house due to a permanent disability, and 
• Other out-of-pocket expenses are directly related to an injury. 

Although these types of losses are generally easy to document, that does not mean insurance companies will issue a payout without working hard to avoid paying these claims. Insurance companies will often dispute the need for particular treatments, challenge the projected future costs, or allege that your losses were caused by pre-existing conditions. That’s why retaining a qualified personal injury compensation attorney NC is important.

Non-Economic Damages: Losses That Are Real but Harder to Measure

Compensatory damages can be awarded for injury-related non-economic damages. In North Carolina, there are types of non-economic damages that are considered to be associated with the consequences of an injury, and therefore cannot be represented with a written receipt. However, the impact of these non-economic damages can be just as severe as their economic counterparts. 

Types of non-economic damages generally include: 

• Pain and Suffering
• Emotional distress damages NC (such as anxiety, depression, or PTSD)
• Loss of Consortium
• Loss of Enjoyment of Life
• Permanent Disfigurement/Scarring

Generally, there is no statutory cap on compensatory damage claims in North Carolina for personal injury. Therefore, developing a comprehensive and evidence-based claim in this case is critical. When appropriate evidence is presented persuasively, a jury has the ability to award very large non-economic damages.

What Evidence Is Needed?

In North Carolina, in order to receive compensation for damages caused by a person, you have to show that the person had a duty to act carefully, failed to act carefully, and caused you specific financial losses. You will need insurance or other kinds of proof of your injury for economic damages North Carolina, such as medical records, wage loss, and expert witness testimony for future medical care. Non economic damages NC often relies on mental health records and a personal account of how you have changed since your injury occurred.

Soft tissue injuries, TBI, and chronic pain are typically short of objective evidence, as many of these injuries do not appear on imaging and are dependent upon the individual reporting symptoms. An experienced accident attorney in North Carolina will be able to identify the proper expert witnesses, develop a plan to gather the necessary documentation to support your injury, and use that documentation to obtain the compensation you deserve.

Punitive Damages in North Carolina Used For Punishing Egregious Conduct

Maximum punitive damages North Carolina is granted by the court in order to punish the defendant for bad conduct. They are granted by the court to:

1. Punish the defendant
2. Deter the defendant from similar conduct in the future.
3. Send a message to society that certain conduct is unacceptable.

Pursuant to N.C. Gen. Stat. § 1D-15, punitive damages may only be awarded if one of the following three aggravating factors can be proven by clear and convincing evidence, in addition to the usual negligence burden of proof: 

1. That the defendant engaged in fraud
2. That the defendant acted with malice 
3. That the defendant’s conduct was willful or wanton. 

Willful or wanton conduct (i.e., when the defendant knew or should have known that by acting as he did, he was putting the safety or rights of other individuals at risk) is by far the most common basis upon which punitive damages are awarded in gross negligence lawsuit North Carolina.

The Burden of Proof

From a procedural standpoint, compensatory and punitive damages differ significantly in terms of their proof. Compensatory damages require the plaintiff to prove their claim by “more likely than not” (preponderance of the evidence), while punitive damages require the plaintiff to prove their punitive damage claims North Carolina by “clear and convincing” (a much higher burden). 

Therefore, your punitive damages lawyer North Carolina must provide compelling evidence, specifically about what the defendant was thinking or how they acted recklessly or intentionally in order to establish that punitive damages should be awarded.

The Statutory Cap

Under North Carolina’s General Statutes, punitive damages (N.C.G.S. § 1D-25) may be limited to three times the amount of compensatory damages awarded or $250,000, whichever is greater. 

In DWI cases, however, no such cap exists, and therefore, there could be greater punitive damages available for an injured party as a result of an impaired driver being involved in an accident than if that party were injured in some other manner.

Can You Get Both?

Yes, punitive damages are awarded on top of the compensatory damages as opposed to replacing them. A plaintiff can collect both types of awards, compensatory and punitive, if they can prove both. Punitive awards are determined separately from the compensatory awards and will still be subject to the statutory limit described above.

When Do Punitive Damages Apply to Common Accidents?

In the state of North Carolina, the defendant’s behavior, which is what they did, not what happened, will dictate whether punitive damages may be awarded. However, certain scenarios commonly give rise to these claims:

• Car accidents: Car accident compensation North Carolina is awarded in cases like driving under the influence of alcohol, racing on public streets, and negative road rage type situations when the defendant’s actions are more than just a mere act of negligence. 
• Premises Liability: The owner of property who knows about a dangerous condition and intentionally conceals it in order to avoid liability. 
• Medical Malpractice: A healthcare provider who lies about medical records or intentionally conceals vital information from a patient. 
• Product Liability: A manufacturer who knows that their product is defective, conceals the defect, and sells the defective product.
• Nursing Home Abuse: Intentional neglect or physical abuse of a vulnerable adult. 

The commonality among these situations is that the defendant acted intentionally or with conscious disregard for the safety of others. Simply being negligent in care, or having a momentary lapse in care, or the inability to foresee an accident, is not enough to qualify for punitive damages in North Carolina Courts. 

What to Know Before Accepting a Settlement

Negotiation settlement decisions are important when you combine compensatory damages with possible punitive damages. Insurance companies are professional negotiators who want to give you as little money as they can for your claim.

Red Flags in a Settlement Offer

Your settlement should reflect all economic losses, both present and future. You should be compensated for your non-economic losses reasonably based upon the severity and duration of your injury, and it should reflect any aggravating circumstances that may allow for a punitive award in court.

Be aware of the following indicators of settlement offers that may be unreasonably low: 

• Ignore future medical costs: There is no provision for ongoing medical care.
• Inadequately addresses pain and suffering: The settlement amount for your pain and suffering compensation NC is too low.
• Arrives too early: Settlement offer issued prior to maximum medical improvement.

The Danger of the First Offer

In most cases, it is best to hold off accepting any initial offer. If you accept the first offer before you have completely determined what your injuries will be, you may be prohibited from recovering any additional compensation later if your injuries worsen.

You should hire or contact a personal injury lawyer to help you determine whether the first offer is fair and equitably represents the total value of your claim.

One Critical Caution: The Contributory Negligence Trap

Do not say sorry or take blame for any part of what happened. North Carolina has a contributory negligence statute, one of the most stringent of all the states, which provides that a claimant is barred from recovering North Carolina injury lawsuit compensation if there is a finding of even 1% of fault on their part. 

To protect your claim, you should avoid: 

• Causing your injuries to appear less serious than they are 
• Trying to guess how the accident occurred 
• Giving a statement of what happened to an insurance adjuster without being represented by an attorney

Injured in North Carolina? Talk to Tatum & Atkinson Law Firm Today

Now you understand what is the difference between compensatory and punitive damages in North Carolina, therefore, we can see why this is not merely academic; it has a direct impact on what strategy your North Carolina accident settlement lawyer will create when preparing proof and how their suggested demands will be established.

At Tatum & Atkinson Law Firm, we have years of experience representing clients in civil tort cases. We provide assistance on cases solely on the basis of a contingency fee agreement, meaning you are charged no attorney’s fees until we win your case. We also provide a free consultation to discuss your rights prior to making any decisions about proceeding with an injury claim.

Call our office anytime at (800) 529-0804; we are ready to listen to your concerns, evaluate your case, and fight for every cent you are entitled to receive.

Frequently Asked Questions!

How long do I have to file a personal injury claim for damages in North Carolina? 

A statute of limitations of three years typically applies in North Carolina to personal injury cases, and failure to file within this time frame may preclude recovery altogether for a claim. 

Are punitive damages available in every personal injury case in North Carolina? 

No. To recover punitive damages, you must have evidence that demonstrates malice, intent to cause an injury, or conduct that is reckless and disregardful of others’ safety. If your injury was caused by ordinary negligence, you are only entitled to recover compensatory damages. 

Should I accept the insurance company’s first settlement offer in North Carolina? 

No, first offers typically do not reflect the true value of your claim (most notably, for future medical care and non-economic damages). Having an attorney review every offer before accepting is advisable, as signed settlement documents are generally conclusive and final. 

What types of accidents can lead to punitive damages in North Carolina? 

Common accident scenarios that lead to punitive damages include drunk driving accidents, intentionally concealing a defective product, nursing home neglect or abuse, and premises liability claims involving intentional concealment of known risks and hazards. 

Can insurance companies refuse to pay compensatory damages in North Carolina?

Yes. If the insurer believes the insured is not liable, has lapsed in coverage, or has not verified injuries sustained, the claim may be denied. Under a contributory negligence statute, if you are found to be even 1% at fault, you are barred from receiving damages.

About the Author

Robert Tatum

Robert Tatum is the founding attorney at Tatum & Atkinson. He is licensed to practice in all North Carolina state and federal courts and before the U.S. Supreme Court. He earned his J.D. from the University of North Carolina School of Law in 2002 and his B.S. from the University of Virginia in 1999. His practice focuses on personal injury law. Connect with him on LinkedIn.