Does Auto Insurance Cover Punitive Damages?

Uninsured motorist insurance does not cover punitive damages in the majority of states in the United States. 1

Most states believe that UM insurance should not offer a punitive damages award because the foregoing criteria are not met. This is because the UM coverage is paid for by the innocent policyholder, not the perpetrator. 2

The explanation is that the practice is not against public policy in the states that enable UM coverage to pay punitive damages. Punitive damages, according to the states, have little effect in deterring wrongdoing. They further claim that rises in the costs of liability insurance plans would be passed on to society as a whole. 3

Punitive damages are not the same as compensatory damages. In a personal injury case, “compensatory damages” reimburse a plaintiff for their losses.

  • Medical costs, property damage, and lost pay are examples of “economic” (pecuniary) damages.

Does general liability insurance cover punitive damages?

The ISO CGL requires an insurer to pay “as damages” all sums that an insured is legally compelled to pay as a result of physical injury or property damage. The CGL does compel the insurer to pay punitive damages because a damage award may include them. Even if the policy requires the insurer to pay punitive damages, some states have determined that they are against public policy and may refuse to allow insurers to pay them. In Florida, for example, liability insurance coverage for punitive penalties awarded against a person for his own improper action is prohibited. Florida, on the other hand, allows insurance coverage for punitive damages based on vicarious culpability. It all starts with the policy language once again. If your CGL policy excludes punitive damages, there’s no need to consider concerns of validity and enforceability outside of the policy. In fact, it is typical for insurers to endorse the CGL in order to exclude punitive damages.

What are punitive or exemplary damages for auto insurance?

Some car insurance contracts specifically prohibit the payment of punitive or exemplary damages to an insured. Punitive or exemplary damages are meant to penalize the individual who caused the injury or damage, or to hold that person up as an example to dissuade others from engaging in similar behavior.

What is punitive damages in a car accident?

Punitive Damages: What Are They? Punitive damages are a type of compensation awarded in the event of a personal injury. Punitive damages are not compensatory, which means they do not recompense the victim for any injuries or damages sustained.

Does progressive cover punitive damages?

Punitive damage coverage is now unavailable from many insurance companies. Of sure, they will investigate cases of wrongful death, but what about other situations? Texting or drunk driving, for example, where no one is killed?

Punitive damages are on the rise, therefore more corporations are following this trend. They won’t have to pay as much, and they won’t have to pay as much. GEICO, Progressive, and Allstate are just a few examples.

What is an example of punitive damages?

Punitive damages, sometimes known as “exemplary damages,” are monetary awards made in court to punish a defendant for negligence. Typically, the defendant is a corporation or other huge enterprise. Cases involving medical malpractice or product liability are two examples. For example, if it is established that a firm sold a product that they knew was defective or may cause injury and still profited from it, they could be required to pay punitive damages if it is proven that they were irresponsible in their decisions to sell these products.

Individuals might also be required to pay punitive damages if their actions cause harm to another person. Drunk or inattentive driving are two examples of this. The defendant would have made a conscious decision in both situations to engage in action that may readily hurt another person. It can even include breaking New York City’s anti-discrimination employment regulations.

Punitive damages are typically used to hold the negligent party accountable and dissuade others from acting in the same way or committing comparable wrongdoing. Despite the fact that the goal and purpose of punitive damages imposed on a firm are not to pay the plaintiff, the plaintiff will receive the monetary amount. When a court orders punitive damages, it is effectively penalizing the defendant, who must pay the amount specified and send it to the plaintiff.

Are punitive damages rarely awarded?

“Punitive damages are almost exclusively reserved for civil actions in which the defendant’s behavior is regarded excessively negligent or malicious, and are not granted for the purpose of compensating harmed plaintiffs.” Punitive damages are designed to punish the perpetrator while also discouraging others from repeating the same wrongdoing.” 1

Punitive damages were given in only 5% of civil cases where plaintiffs triumphed at trial in 2005, the most recent year analyzed by the US Department of Justice (DOJ).

2

Punitive damages were given in only 3% of plaintiff-winner tort cases3; in contract instances, they were awarded in 8% of disputes.

4

Medical Malpractice: Only 1% of cases where medical malpractice victims showed responsibility at trial were given punitive damages in 2005.

5

Product Liability: Only 1% of product liability cases with a winning plaintiff were given punitive damages in 2005.

6 This contains trials involving asbestos and other products.

Trends: The Department of Justice determined that the incidence of punitive damages has not increased over time, based on long-term statistics from state trials in the nation’s 75 most populous counties:

The percentage of plaintiffs who receive punitive damages from civil juries has remained continuously low — 6% in 1992, 4% in 1996, 6% in 2001, and 5% in 20057.

In all tort trials, the percentage of successful plaintiffs awarded punitive damages has continuously been modest — 3.3 percent in 1996, 5.3 percent in 2001, and 3.6 percent in 20058.

Punitive damages are awarded to a small fraction of successful medical malpractice claimants — 1.1 percent in 1996, 4.9 percent in 2001, and 2.6 percent in 20059.

In product liability trials, the percentage of plaintiffs who receive punitive damages is continuously low — 7.7% in 1996, 4.2 percent in 2001, and 1.3 percent in 200510; and

In contract proceedings, the percentage of victorious plaintiffs collecting punitive penalties was no higher in 2005 than it was in 1996, with a victory rate of 8% in both years.

11

Long-term According to data from the Department of Justice’s state tort trials in the nation’s 75 most populous counties,

Trials of Torts Between 2001 and 2005, the percentage of successful plaintiffs awarded punitive damages in tort proceedings decreased by 33.3 percent. 12

Medical Malpractice: The number of victorious plaintiffs given punitive damages declined by 46.1 percent between 2001 and 2005.

13

Product Liability: Between 2001 and 2005, the percentage of plaintiffs who received punitive damages fell by 70.4 percent.

14

The median amount of punitive damages granted to plaintiffs in civil proceedings in 2005 was $64,000.

15 For all tort cases, the median punitive damage award was $55,000.16

The ratio of punitive to compensatory damages was 3 to 1 or less in 76 percent of the 632 civil trials containing both punitive and compensatory awards.

17

When deciding on punitive damages in tort cases, juries and judges employ similar logic.

When comparing tort bench and jury trials in 2005, there was no discernible difference in the percentage of litigants awarded punitive damages.

18

In tort jury ($100,000) and bench ($54,000) trials, the median punitive damage awards were not statistically different.

19

The amount of punitive damages that can now be granted in a case is now subject to some arbitrary constraints.

While hesitating to say too much about the appropriateness of specific punitive damages awards, the Supreme Court in State v Farm Mut. Auto Ins. Co. v. Campbell (and in the earlier case, BMW of N. Am., Inc. v. Gore) 20 said that “the degree of reprehensibility of the defendant’s conduct” is the most important criteria, followed by the relationship between compensatory and punitive damages (the Court mentioned a single digit ratio) and In the recent case Philip Morris USA v. Williams, 07-1216, the Court upheld a $79.5 million award against a cigarette business with a substantially higher ratio, where it was argued that the defendant’s behavior was particularly despicable and the harm was physical rather than economic.

States. At least one-third of the 45 states that allow punitive damages have passed some type of cap, or limit, on judges and juries’ authority to award punitive damages. Over 30 state legislatures have increased the burden of proof for punitive damages awards, making it more difficult for affected consumers to prove them. A part of punitive damages must be paid into state-designated coffers in certain states. Other states require or allow split trials, in which the injured party is obliged to try their case twice, first showing culpability and then justifying the amount of the award. In some places, jurors are not allowed to decide the amount of a punitive damages award; only the judge is allowed to do so.21

1 United States Department of Justice, Bureau of Justice Statistics, “Punitive Damage Awards in State Courts, 2005,” NCJ 233094 (March 2011), at 1 (citing Black’s Law Dictionary, 1990), http://bjs.ojp.usdoj.gov/content/pub/pdf/pdasc05.pdf.

7 United States Department of Justice, Bureau of Justice Statistics, “Civil Bench and Jury Trials in State Courts, 2005,” NCJ 223851 (October 2008)(revised April 9, 2009), at 10 (http://bjs.ojp.usdoj.gov/content/pub/pdf/cbjtsc05.pdf).

8 United States Department of Justice, Bureau of Justice Statistics, “Tort Bench and Jury Trials in State Courts, 2005,” NCJ 228129 (November 2009), at 12 (Table 12), 13 (http://bjs.ojp.usdoj.gov/content/pub/pdf/tbjtsc05.pdf).

11 Bureau of Justice Statistics, “Contract Bench and Jury Trials in State Courts, 2005,” NCJ 225634 (September 2009), at 6, http://bjs.ojp.usdoj.gov/content/pub/pdf/cbajtsc05.pdf.

12 “Tort Bench and Jury Trials in State Courts, 2005,” supra n.8, at 12; “Tort Bench and Jury Trials in State Courts, 2005,” supra n.8, at 12; “Tort Bench and (Table 12).

15 “Punitive Damage Awards in State Courts, 2005,” supra note 1, at 1 (Table 8).

“Tort Bench and Jury Trials in State Courts,” supra n.8, at 6, 7 (Table 6).

20 BMW of North America, Inc. v. Gore, 517 U.S. 559, 581 (2003); State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408 (2003); State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408 (2003); State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408 (2003); State Farm Mut. Auto Ins (1996).

How are punitive damages calculated?

Although there is no maximum sum, punitive penalties normally do not exceed four times the amount of compensatory damages. For example, if a plaintiff receives $100,000 in compensatory damages and is also awarded punitive damages, the punitive damages award is likely to be up to $400,000.

Is punitive damages a cause of action?

Punitive damages, also known as exemplary damages, are monetary awards made to punish the defendant for egregious behavior and/or to reform or dissuade the offender and others from engaging in similar behavior in the future. The plaintiff will receive all or part of the punitive damages award, despite the fact that the purpose of punitive damages is not to compensate the plaintiff.

Punitive damages are typically awarded if compensatory damages are regarded an inadequate remedy. They may be imposed by the court to prevent plaintiffs from being undercompensated, to provide recourse for undetectable torts, and to relieve part of the burden on the criminal justice system. Punitive damages are most crucial for infractions of the law that are hard to discover.

Punitive damages awarded in court systems that recognize them, on the other hand, may be difficult to enforce in jurisdictions that do not. Punitive penalties awarded to one party in a US lawsuit, for example, might be difficult to enforce in a European court, since punitive damages are most likely to be regarded a violation of the public order.

Because they are frequently paid in excess of the plaintiff’s proved harms, punitive damages are granted only in unusual instances, usually under tort law, if the defendant’s behavior was egregiously devious. In most contract disputes, punitive damages are not available. The main exception is in insurance bad faith cases in the US if the insurer’s breach of contract is alleged to be so egregious as to amount to a breach of the “implied covenant of good faith and fair dealing”, and is therefore considered to be a tort cause of action eligible for punitive damages (in excess of the value of the insurance policy) (in excess of the value of the insurance policy).

Are punitive damages taxable?

Punitive Damages: Punitive damages are taxable and should be recorded on line 8z of Form 1040, Schedule 1 as “Other Income,” even if they were received as part of a settlement for personal physical injuries or sickness.

Can you get punitive damages for intentional torts?

Tort proceedings are decided in a civil courtroom. This judicial procedure is not the same as a criminal trial. The goal of a civil action is to compensate victims of detrimental conduct rather than to penalize the wrongdoer. The types of damages that can be recovered depend on the sort of tort that is being claimed.

Intentional tort damages are typically larger and more generous than negligence damages. Medical bills, lost wages, and pain and suffering are all common types of damages. Punitive damages may be available in intentional torts, as society desires to dissuade its members from knowingly harming one another. To be eligible for compensation, you must show that you acted with malice.

In order to be compensated in a negligence case, the plaintiff must have experienced actual harm as a result of the defendant’s actions. Compensation and punitive damages are the two types of damages that a plaintiff may be able to receive. Compensatory damages are intended to put the plaintiff back in the position he was in prior to the defendant’s negligence injuring him. If the defendant’s actions were careless, wanton, or malicious, punitive damages may be assessed.