Attorney Fees are almost universally excluded from the definition of damages in attorney malpractice policies. Punitive damages may or may not be excluded from malpractice coverage, but still may not be permitted by your state.
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. Unlike the majority of attorney malpractice policies the FLMIC policy coverage for damages is found in both the definition policy section and the exclusion policy section.
I. DEFINITIONS
4. “Damages” means a monetary judgment or settlement which the Insured is legally obligated to pay for any Claim to which this insurance applies.
7. “Fines, Sanctions or Penalties” means punitive damages, multiple damages or other disciplinary related assessments, orders or judgments (including costs and attorneys’ fees) imposed or entered by a court or disciplinary authority against an Insured.
V. EXCLUSIONS
A. THE POLICY DOES NOT AFFORD ANY COVERAGE OR BENEFITS WITH RESPECT TO:
2. Any Claim seeking Fines, Sanctions or Penalties.
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
Managing Director, CEO
(616) 940-1101 Ext. 7080