Compensatory damages pay for what you lost; punitive damages punish and deter. Constitutional due-process limits cap their ratio to compensatory awards, which is one reason billion-dollar verdicts routinely shrink: Ingham's $4.69 billion (mostly punitive) became $2.1 billion on appeal.
Availability and caps vary sharply by state. In settlement talks punitive exposure is leverage more than expectation — settlements price risk, and most individual recoveries contain no separately identified punitive component.
Sources & attribution