Mississippi Property & Casualty Practice Exam

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Which statement is true regarding punitive damages?

They provide compensation for lost wages
They are meant to deter future wrongful conduct
They are calculated based on market value
They apply only to property damages

The correct answer is: They are meant to deter future wrongful conduct

Punitive damages are a type of legal remedy intended primarily to deter the wrongdoer and others from engaging in similar conduct in the future. Unlike compensatory damages, which are awarded to compensate a plaintiff for actual losses such as medical bills or lost wages, punitive damages serve to punish the defendant for egregious behavior and to serve as a warning to society that such actions will not be tolerated. Their purpose is rooted in public policy, focusing on the behavior of the defendant rather than just the losses incurred by the plaintiff. The other options do not accurately reflect the nature and purpose of punitive damages. For instance, while compensatory damages cover lost wages and market value calculations may come into play in other types of damages, punitive damages do not directly address these. Additionally, punitive damages are not limited to property damages; they can be awarded in situations involving personal injury or other wrongful actions as well.