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 NLFI (Attorney Protective) policy the definition of damages may include punitive damages:
III. DEFINITIONS
F. “Damages” mean any monetary judgment, award or settlement of compensatory damages, any punitive or exemplary damages if insurable under the applicable law most favorable to the insurability of punitive or exemplary damages, pre-judgment interest and post-judgment interest. Damages do not include:
1. fines, sanctions, penalties or taxes, including but not limited to awards under 28 U.S.C. § 1927, the Federal Rules of Civil Procedure, or state or municipal counterparts to any of the foregoing;
2. legal fees, costs and expenses previously paid by the claimant, or retained or possessed by an Insured, whether claimed by way of disgorgement of fees, restitution of specific funds, forfeiture, financial loss or otherwise;
3. monetary sums that are, in whole or in part, a consequence of the injuries described in Subsection F.1 or F.2 above;
4. punitive or exemplary damages if deemed uninsurable under applicable law, and the multiplied portion of any multiplied damages award; or
5. Claim Expenses.
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