Which of the following accurately describes punitive damages?

Punitive damages are specifically designed to serve as a form of punishment for a party that has engaged in particularly egregious, reckless, or malicious behavior. The primary aim of these damages is to deter the wrongdoer and others from committing similar acts in the future by imposing a financial consequence that goes beyond mere compensation for the victim's losses. This punitive nature distinguishes them from compensatory damages, which are intended solely to cover financial losses incurred by the victim.

By imposing punitive damages, the legal system addresses not only the specific harm caused to the injured party but also reinforces societal standards of acceptable behavior, thereby urging individuals and entities to act with due care and respect for the rights of others. This is why the statement about punitive damages being meant to punish wrongdoing is accurate.