Insuring Uninsurable Punitive Damages

For the first time in history, many U.S. insurers today are willing to afford coverage under various types of insurance policies for punitive and exemplary damages under certain circumstances.  This coverage is typically referenced in the definition of “Loss” with a provision which states that Loss includes punitive or exemplary damages.  Such a provision does not, though, afford blanket coverage for any punitive or exemplary damage award since all of the exclusions in the policy would still apply.  In addition, absent special provisions or arrangements, such coverage would be available only if punitive and exemplary damages are deemed insurable under the law pursuant to which the policy is construed.

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