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. In the Golden Bear policy the definition of loss (damages):
R. Loss means:
1. compensatory damages which an Insured is legally obligated to pay as a result of a Wrongful Act covered by this Policy, and
2. punitive or exemplary damages which an Insured is legally obligated to pay because of a Wrongful Act covered by this Policy, but only if insurable under the law of the jurisdiction applicable to the Claim;
3. Loss does not include:
a. civil or criminal fines, sanctions, penalties, liquidated damages, or taxes;
b. the multiplied portion of any multiplied damage award;
c. any return, withdrawal, restitution, or reduction of professional fees, profits, or other charges;
d. amounts that constitute the costs of complying with any order for, grant of, or agreement to provide, injunctive or non-monetary relief;
e. any State or Federal Bar Association fines or penalties;
f. workers’ compensation, disability, unemployment, social security, payroll, or any other employment benefit;
g. any monetary relief that is uninsurable under the law of the jurisdiction that is applicable to the Claim;
h. bail; or
i. any costs associated with a criminal investigation.
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