Britannica AI Icon

Quick Summary

In law, compensation refers to money awarded to a person for loss or injury caused by another's wrongful act. This is also known as damages. Compensation can be given for various reasons, including:1

  • Loss or Injury: When someone suffers harm due to another's actions, they may receive monetary compensation to cover their losses. This can include physical injury, pain and suffering, and lost wages.213
  • Goods or Services: Compensation can also be payment for goods or services rendered.2

In some extreme cases, punitive damages may be awarded. These are additional sums of money intended to punish the wrongdoer and deter similar conduct in the future, rather than to compensate for a specific loss. Punitive damages are typically awarded in cases involving oppression, fraud, gross negligence, or malice.45

Summary created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.

Ask Britannica AI about this topic

Britannica doesn't have a full article on this topic, so we've curated a list of our relevant coverage.