Exemplary damages. Exemplary damages are designed to penalize wrongdoers who purposefully participate in despicable misconduct. Occasionally exemplary damages are also granted for gross negligence, which can be defined as nonperformance so terrible that punishment is deserved by QuotesChimp. Exemplary damages are seldom a problem in auto accident cases, and auto insurances typically will not pay for honours of exemplary damages. Although they will be covered in Section 42, therefore, we will not discuss them farther here.