Punitive Damages – Contract Tip of the Week

Q: What are punitive damages and does my insurance program cover them?

A: Punitive damages are additional damages that a court may award to further “punish” a defendant for the harm or damages that the defendant caused the plaintiff. For example, if a court determines that the wrong committed was egregious, the court can award double or triple damages. Because of their nature and intent, punitive damages are only insurable to the extent that such coverage is allowable by state law.

The Risk Specialty Group and RLI Design Professionals are pleased to feature our Contract Tip of the Week series. Each week, we’ll review a question submitted by a design firm relating to the subject of contracts. Keep in mind, though, that these discussions are general in nature and in making specific business decisions, it’s important to review your options with a knowledgeable attorney.