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. Just because it is excluded does not mean you will find it in the ‘exclusion section’. The more common place to find the punitive damages ‘exclusion’ is in the damages definition. In the Corepointe policy it is the definition of damages:
II. DEFINITIONS
E. “Damages” means judgments, including interest on judgments, awards and settlements if negotiated with the assistance and approval of the Company. Damages do not include:
1. Legal fees, costs and expenses paid to or incurred or charged by the Insured, whether or not claimed as restitution of specific funds, forfeiture, financial loss, set-off or otherwise, and injuries that are a consequence of any of the foregoing;
2. Any conversion, misappropriation, improper comingling, defalcation or negligent supervision by any person or entity of any funds or property of any person or entity, including any loss or reduction in value of such funds or property, return or replenishment of such funds or property, or the gaining of any personal profit or advantage to which the Insured is not legally entitled, including any conversion, misappropriation, improper commingling, defalcation or negligent supervision by any person or entity resulting, directly or indirectly, from unauthorized access to any network;
3. civil or criminal fines, sanctions, penalties or forfeitures, whether pursuant to federal, state or local law, statute, regulation or court rule and injuries that are a consequence of any of the foregoing;
4. punitive or exemplary amounts and the multiplied portion of multiplied awards;
5. any form of non-monetary relief;
6. amounts for which the Insured is not financially liable or that are without legal recourse to the Insured.
7. matters deemed uninsurable by operation of law.
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.
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as
L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
(616) 940-1101 Ext. 7080