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 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 NLFI (Attorney Protective) policy the definition of damages excludes punitive damages:
B. DEFINITIONS
9. Damages means the amount that an Insured becomes legally obligated to pay as a result of any covered claim including, but not limited to, a monetary judgment, award or settlement, and any interest imposed on such judgment, award or settlement, but does not include:
a. The return or restitution of legal fees, costs or expenses paid to or charged by the Insured for legal services, no matter whether claimed as a measure of the recovery sought, or as restitution, unearned professional fees, forgiveness of professional fees, forfeiture, financial loss or set-off;
b. Any civil or criminal:
(1) fines, sanctions, penalties, forfeitures;
(2) statutory penalties;
(3) legal fees;
(4) exemplary or punitive damages; or,
(5) awards designed to punish, deter, regulate conduct, fee shift or penalize;
imposed or awarded against an Insured or any client of an Insured, whether pursuant to any federal or state law, statute, regulation, ordinance, court rule or case law;
c. The multiplied portion of multiplied awards;
d. Any costs incurred to comply with any order for injunctive or non-monetary relief or to comply with an agreement to provide such relief;
e. Any amount not insurable under the applicable law;
f. Claim expenses, disciplinary proceeding expenses, crisis event expenses or privacy incident expenses; or,
g. Any amount ordered to be paid, awarded or costs necessary to comply with any order or ruling in a disciplinary proceeding.
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