Attorney Fees are almost universally excluded in the attorney malpractice policy damages definition. Punitive damages may or may not be excluded from malpractice coverage, but your state may not permit.
Your insurer may pay defense costs and the award for damages in a covered malpractice claim. Fees and sanction awards are another matter. Fees or sanction awards often exceed the value of the underlying claim. Awarded punitive damages could dwarf the underlying case.
The time to check for coverage is not after the punitive damage award. So how can you determine whether a particular malpractice insurance policy covers punitive damages? Punitive damage awards are normally awarded for egregious acts some malpractice policies provide coverage other policies exclude the coverage. In the Twin City policy the definition of damages excludes punitive damages:
B. DEFINITIONS
4. Damages mean compensatory damages that an insured becomes legally obligated to pay as a result of any judgment, award or settlement, provided any settlement is negotiated with our assistance and approval.
Damages do not include:
a. Any fines, sanctions or penalties, or punitive or exemplary damages;
b. Restitution, reduction, or set off of any fees, other consideration, and/or expenses paid to or charged by an insured for professional legal services;
c. Any damages which are a multiple of compensatory damages awarded against an insured;
d. Matters deemed uninsurable by law; or
e. Equitable, injunctive or other non-monetary relief.
Click here for Punitive/Compensatory Damages Allowed by State
CLICK HERE TO OBTAIN AN ATTORNEY MALPRACTICE QUOTE
This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU, CPIA
Managing Director, CEO
(616) 940-1101 Ext. 7080