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Punitive Damages

What are Punitive Damages?

Punitive Damages may refer to a financial award given to a plaintiff in a civil case as a form of punishment to the defendant. Punitive damages are awarded in addition to, and in excess of, any amount that may be awarded for compensatory damages. The purpose of punitive damages is to deter the defendant and others from repeating the same bad conduct.

Punitive Damages in More Detail

Punitive damages are typically awarded only in cases involving intentional or malicious misconduct, or in cases involving gross negligence. This is because punitive damages are intended to punish the offender and serve as a warning to others that similar conduct will not be tolerated.

Punitive damages have been a part of the civil law system in the United States since the nation’s founding. In most states, punitive damages are capped at a certain amount, such as three times the compensatory damages award, or a certain dollar amount.

Punitive damages differ from compensatory damages in that they are not intended to compensate the plaintiff for any financial losses he or she has suffered, but to punish the defendant and deter similar conduct in the future. Punitive damages are rarely awarded, as they are generally only applicable in cases of extreme misconduct.

In the context of D&O insurance, punitive damages may be covered by a policy if the policy includes coverage for punitive damages. It is important to note, however, that some states may not allow punitive damages to be covered by insurance, so this should be taken into consideration when purchasing D&O coverage.