What Does Damages Mean?
Damages, in the context of insurance, refer to monetary compensation one party must pay to another party in the event that the former is found to be responsible for a loss or injury to the latter. Many different insurance products provide financial protection for a number of damages.
Insuranceopedia Explains Damages
There are three main types of damages. Compensatory damages are meant to restore to the injured party what they have lost due to the other party’s wrongful act. This includes bodily injury, property damage, consequential damages, and general damages. Second, nominal damages refer to small amounts awarded as a symbolic gesture to indicate the wrongdoing of the defendant in cases in which the plaintiff cannot provide substantial proof of loss. Finally, punitive damages are in excess of compensatory damages and meant to punish the defendant for a particularly egregious nature of the misconduct. It is important to understand the coverage a liability insurance policy offers to minimize exposure.