What Are Punitive Damages?
Punitive damages (also called exemplary damages) are awarded on top of compensatory damages when a defendant’s conduct was so outrageous that punishment and deterrence are warranted. Unlike medical bills or lost wages, punitive damages are not meant to make you whole — they are meant to punish the defendant and deter similar conduct.
Arizona’s Standard for Punitive Damages
Arizona requires an “evil mind” standard for punitive damages, established in Rawlings v. Apodaca (1986) and Gurule v. Illinois Mutual Life and Casualty Co.. To win punitive damages in Arizona, you must show the defendant:
- Acted with intent to injure you, or
- Consciously pursued a course of conduct knowing it created a substantial risk of significant harm — and consciously disregarded that risk.
This is a much higher bar than ordinary negligence. Pure carelessness, even gross negligence, does not support punitive damages. The defendant must have actually known the risk and chosen to ignore it.
When Are Punitive Damages Available in Arizona PI Cases?
- Drunk driving cases: A defendant who chose to drive with a very high BAC may meet the evil mind standard, knowing they were impaired.
- Street racing: Deliberately engaging in illegal racing on public roads knowing pedestrians and drivers are at risk.
- Road rage: Intentionally ramming another vehicle.
- Bad faith insurance: Arizona allows punitive damage claims against insurers who deny valid claims in bad faith (ARS § 20-461).
Arizona Does Not Cap Punitive Damages
Unlike many states, Arizona has no statutory cap on punitive damages. The Arizona Constitution Article 2, Section 31 prohibits caps on damages in tort actions. However, punitive awards must be proportional to compensatory damages under federal due process (BMW of North America v. Gore).
Frequently Asked Questions
Can I get punitive damages if a drunk driver hit me in Arizona?
Possibly. Punitive damages require proof of “evil mind” — that the defendant knew they were creating a substantial risk of harm and consciously disregarded it. A defendant who drove with a very high BAC and prior DUI history may meet this standard. It is highly fact-specific and requires clear and convincing evidence.
Are punitive damages taxable in Arizona?
Yes. Under federal tax law (IRC § 104), punitive damages are taxable as ordinary income, unlike compensatory damages in physical injury cases which are generally tax-free. Consult a tax advisor about any punitive damage award in your case.
Questions about punitive damages? Call Wood Injury Law at (623) 207-0000 for a free review.