What are punitive damages designed to do?

Punitive damages are specifically intended to punish the defendant for particularly egregious or harmful behavior and deter others from engaging in similar conduct. They go beyond mere compensation for the plaintiff's losses and aim to make an example of the defendant to uphold social standards of conduct. This is particularly relevant in cases where the defendant’s actions were found to be malicious, reckless, or grossly negligent.

In contrast, the other options serve different purposes. For example, reimbursement for losses relates to compensatory damages that provide financial restitution for the actual harm suffered by the plaintiff. Encouraging settlement before trial pertains to efforts to resolve disputes without the need for litigation, often facilitated by mediation or negotiation. Covering administrative costs of litigation does not align with the intention of punitive damages, as punitive damages are designed to address behavior rather than administrative expenses related to the legal process.