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 Twin City policy the definition of loss (damages) excludes punitive damages:
IV. DEFINITIONS
(K) Loss
“Loss” shall mean a monetary judgment, award or settlement for damages including statutory attorneys’ fees and costs. Loss shall also include pre and post judgment interest, the non-multiplied portion of punitive and exemplary damages to the extent such damages are insurable under the law of the most favorable applicable jurisdiction that allows coverage for such damages. Loss shall not include:
(1) any amount for which any Insured is not financially liable or that are without legal recourse to an Insured;
(2) criminal or civil fines, penalties, taxes or sanctions;
(3) the multiple portion of any multiplied damages award;
(4) the return, reduction, disgorgement, or restitution of legal fees, costs and expenses, no matter how claimed;
(5) all amounts associated with any orders or agreements to provide affirmative, equitable, injunctive or non-monetary relief, other than Claim Expenses associated with such relief;
(6) any matters, judgments, damages or other amounts uninsurable under the laws pursuant to which this Policy is construed; or
(7) any amount allocable to uncovered Loss under this Policy.
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, CPIA
Managing Director, CEO
(616) 940-1101 Ext. 7080