'Damages' is a term used for a sum of money awarded by a court to compensate for some breech of duty or for the violation of some right. There are two main kinds of damages: compensatory damages, sometimes called actual damages, and punitive damages. Compensatory or actual damages generally cover expenses incurred by the victim of a wrongdoing, while punitive damages are intended to punish the perpetrator of the wrongdoing. In some cases, the amount of damages is determined in the terms of a contract between the parties, and these are generally called 'liquidated damages.' A court sometimes awards nominal damages, for example $1 (one dollar), to establish that a wrong has been committed but where there are no expenses or punitive damages to be paid. In personal injury cases, victims can sue for actual damages as well as compensation for pain and suffering. In some states, the amount of damages for pain and suffering is regulated, often to a certain multiple of the actual damages. The victim's expenses are first determined, including medical bills, loss of income due to the accident, costs of repairing damaged property, and other verifiable expenses. Compensation for pain and suffering is then calculated using a multiplication factor determined by the seriousness of the injury. The sum of these damages becomes the total amount of the damages claim. Often, insurance companies attempt to reach a settlement out of court, and the exact amount of damages is the subject of negotiations.
