Which of the following statements about compensatory damages is true?

Compensatory damages are intended to cover actual losses suffered by a plaintiff due to the unlawful actions of the defendant. This type of damage is designed to restore the injured party to the financial position they were in before the harm occurred, addressing both direct and consequential losses. For instance, in a breach of contract case, compensatory damages may include lost profits along with any costs incurred because of the breach.

The other statements about compensatory damages do not hold true. Not every legal case results in compensatory damages, as it depends on the specific circumstances of the case and the type of harm claimed. Compensatory damages are not intended to punish the offender; that purpose is reserved for punitive damages. Finally, while some jurisdictions may set caps on certain types of damages, compensatory damages are not universally limited by a specified amount across all cases, making the claim of them never exceeding a specified amount inaccurate. Thus, the focus of compensatory damages is squarely on actual losses rather than punishment or arbitrary limits.