Glossary
Punitive damages
Extra damages meant to punish very bad conduct, not to repay a loss. Many states cap them; Texas calls them exemplary damages.
General information, not legal advice. Talk to a licensed attorney in your state.
Quick answer
Punitive damages are extra damages meant to punish very bad conduct and discourage it, not to repay a loss. Many states cap them, and Texas calls them Exemplary damages. Texas's term for punitive damages, awarded only for fraud, malice or gross negligence, and capped by statute. Glossary.
In a car accident claim#
Most of a crash claim pays you back for losses. Punitive damages come up only when the conduct was far worse than ordinary Negligence. Failing to use the care a reasonable person would use in the same situation, such as running a red light or texting while driving. Glossary, such as drunk driving or a trucking company ignoring safety rules. States set the bar high. In Texas, a claimant must prove by clear and convincing evidence that the harm resulted from fraud, malice or gross negligence. Georgia requires clear and convincing evidence of willful misconduct, malice, fraud, wantonness, oppression or an entire want of care that suggests conscious indifference to consequences.
Many states limit the amount:
| State | Cap | Exceptions |
|---|---|---|
| Georgia | $250,000 in most cases | No cap for product liability claims, or a defendant who acted with specific intent to cause harm or while under the influence of alcohol or drugs to the point that judgment was substantially impaired |
| North Carolina | three times compensatory damages or $250,000, whichever is greater | the cap does not apply when the defendant's driving would be the crime of driving while impaired |
Several states treat impaired driving differently. In Florida, for example, the usual limits on punitive damages do not apply to a defendant who was impaired by alcohol or drugs or had a blood or breath alcohol level of 0.08 or higher. Our guides to drunk driver accidents and whether settlements are taxable explain more.
Example#
Related terms#
Questions people ask
Can I get punitive damages for an ordinary car accident?
Usually not. Ordinary carelessness, such as misjudging a turn, is not enough. States require much more serious conduct, such as malice or gross negligence, and often a higher standard of proof.
Are punitive damages taxable?
Yes. Under IRS guidance, punitive damages are taxable, even when they are part of a settlement for a physical injury, unlike most compensation for physical injuries.
Sources
- Cornell LII Wex, Punitive damages — definition and the conduct required
- United States Courts, Glossary of legal terms — compensatory and punitive damages
- Texas Legislature, Civil Practice and Remedies Code chapter 41 — exemplary damages standard and cap
- Official Code of Georgia, O.C.G.A. § 51-12-5.1(b) — as of October 2026
- North Carolina General Assembly, G.S. 1D-25(b) — as of October 2026
- North Carolina General Assembly, G.S. 1D-26 — as of October 2026
- Florida Legislature, Florida Statutes § 768.736 — as of October 2026
- IRS, Publication 4345 Settlements—Taxability (Rev. 9-2023) — as of October 2026
Last reviewed October 29, 2026 by the Accident Claim Facts editorial team. Found an error? Tell us.
Keep reading
- GlossaryGlossaryShort, plain-English definitions of the legal and insurance terms that come up after a crash, each with an example, related terms and the sources behind it.
- Accident typesDrunk driver accidentsA drunk-driving crash usually leads to two cases: the state's criminal case and your own injury claim. How they differ, when punitive damages or a bar can be…
- Money and compensationTypes of damagesCar accident damages fall into three groups: economic losses with a bill or paycheck behind them, non-economic harm such as pain, and rare punitive damages…
- Money and compensationTaxes on settlementsUnder federal law, damages for physical injuries are generally not taxable income, but punitive damages, interest and some other parts of a settlement can be…
- GlossaryPure comparative faultThe version of comparative negligence that lets you recover something even if you were mostly at fault, reduced by your share.
- GlossaryQuantum meruitPayment for the reasonable value of work already done when there is no completed contract to pay under, such as a lawyer discharged before a case ends.