The term "prejudgment interest" denotes the interest on a judgment computed from the time of the actual injury to the date of the final judgment. It is interest on a sum of money which, until the rendering of final judgment, has not been declared to be damages for the plaintiff. Prejudgment interest is not punitive. It is better viewed as compensatory in nature because its purpose is to indemnify a claimant for the loss. of the money which presumably could have been earned had payment of damages not been delayed. Once a cause of action accrues, the injured party becomes entitled to be made whole. Prejudgment interest may be viewed as an essential element of fair and just compensation.
David J. Pierce,
Insurer's Liability for Prejudgment Interest: A Modern Approach,
U. Rich. L. Rev.
Available at: http://scholarship.richmond.edu/lawreview/vol17/iss3/9