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 Westport policy the definition of loss (damages) excludes punitive damages:
III. DEFINITIONS
K. “LOSS” MEANS the monetary and compensatory portion of any judgment, award or settlement, provided always that any settlement is negotiated by the Company or with the Company’s approval and that LOSS shall not include:
1. civil or criminal fines, penalties, fees or sanctions levied against an INSURED;
2. matters deemed uninsurable by operation of law;
3. punitive or exemplary damages;
4. the multiplied portion of any multiple damages;
5. the return by any INSURED of any fees or remuneration paid to any INSURED;
6. any form of non-monetary relief or costs or fees incident thereto,; or
7. any amount for which any INSURED is absolved from payment by reason of any covenant, agreement or court order or for any amount for which there is no legal recourse against an INSURED.
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