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Question of the Month

Many times the issue of the insurability of punitive damages comes before a court. The answer to the question of insurability usually depends on the jurisdiction in which the issue is raised. There are currently three positions that have been adopted by the courts. In some states, punitive damages are flatly not insurable as a matter of public policy; in others, the courts have held that the language of the insurance contract controls; and finally, punitive awards assessed against an insured are insurable as long as there is vicarious liability involved.

The insured will want to know whether he will have coverage for punitive damages under his general liability policy. He will want to know how the various jurisdictions handle punitive damages. He may even want to know what punitive damages are. The article in the Public Liability M.7 pages discusses the insurability of punitive damages and offers other useful information on the subject. See Insurability of Punitive Damages.

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