Attorney Malpractice Fees/Punitive Damages Excluded? – StarStone
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 StarStone National policy the definition of damages may include punitive damages:
SECTION VII–DEFINITIONS
E. Damages means compensatory judgments, settlements or awards, but does not include fines or penalties, sanctions, the return of fees or other consideration paid to the Insured, or that portion of any award or judgment caused by the trebling or multiplication of actual damages under federal or state law. Damages does not include matters uninsurable in the jurisdiction governing this policy.
However, if a Suit is brought against an Insured with respect to a Claim falling within the scope of coverage afforded by this policy, and such Suit seeks both compensatory and multiplied damages, then the Company will afford a defense to such action without liability for payment of such multiplied damages.
Damages includes punitive or exemplary damages to the extent such damages are insurable under the internal laws of the applicable jurisdiction that most favors coverage for such damages.
Notwithstanding the foregoing:
1. For Named Insureds in Illinois and Kansas: In applying the foregoing, only punitive damages awarded for vicarious liability of the Insureds is insurable under state law.
2. For Named Insureds in Minnesota: Provided, however, punitive damages shall only be covered under this policy to the extent that this policy is construed by a court of competent jurisdiction, or an arbitration panel:
a. Pursuant to Minnesota law, and such damages are awarded against an Insured for that Insured’s vicarious liability in a Claim and are otherwise covered under this policy; or
b. Under the laws of any jurisdiction other than Minnesota, and such damages awarded against an Insured in a Claim, if such damages are insurable under the laws of that jurisdiction, and are otherwise covered under this policy.
punitive_damages_insurability_by_state_2025-08-14
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
Lee@L2Ins.com
616-726-7080
