Definition - What does Compensatory Damages mean?
Compensatory damages are amounts of money that parties can be forced to pay if they are found responsible for causing economic loses to other parties following a lawsuit. Compensatory damages can be relatively small in amount, or they can be very large; it depends on how much the plaintiff lost as a result of actions or omissions by the defendant.
Justipedia explains Compensatory Damages
There are many different circumstances where a plaintiff can sue a defendant for compensatory damages. For example, if a skateboarder is skateboarding in a park, and he trips and his skateboard crashes into a woman and breaks her leg, this could result in a lawsuit. The woman could sue the skateboarder for damages to cover pain and suffering, as well as any other losses she suffered. If she won the lawsuit, then the skateboarder would have to pay compensatory damages in order "compensate" for her losses.