What term describes money awarded for damages caused by a policyholder?

• A. Compensatory Damages
• B. Punitive Damages
• C. Emotional Damages
• D. Special Damages

Answer: (A)

The term that best describes money awarded for damages caused by a policyholder is "Compensatory Damages." This type of damages is intended to compensate the injured party for losses incurred due to the actions or negligence of the policyholder. The fundamental purpose of compensatory damages is to restore the injured party to the position they would have been in had the damage not occurred. This encompasses a wide range of losses, including medical expenses, property damage, lost wages, and other economic impacts directly resulting from the event or policyholder's actions.

For instance, if a policyholder's negligence results in a car accident, compensatory damages would cover the expenses related to vehicle repair, medical treatment for injuries sustained, and any lost income during recovery. This aspect emphasizes the principle of making the injured party whole, reflecting the compensatory nature of these damages while excluding punitive or non-economic damages.