SATURDAY, SEPTEMBER 17, 2011
An individual initiating a products liability litigation often wants compensatory damages to restore or compensate for the loss they suffer. In many situations, injured litigants have won in collecting further punitive damages, other than compensatory damages.
Punitive damages are given to punish a litigationist for his or her unreasonable, unlawful behavior and to deter the defendant and other people from getting in alike inappropriate acts. In states which allow a punitive damages award in a products liability case, it must generally be established that the seller recklessly overlooked the safety of users.
Anywhere punitive damages are allowed, the question emerges as to whether an insured may make claims for such expenses consequent to its products liability insurance coverage outlined in their liability policy. This question has been answered both positively and negatively by courts. In reaching a resolution to this issue, courts have been called upon to interpret the insurance policy to find out if punitive damage awards are within the proposed coverage. In making such determination, it is mandatory to browse the specific policy language in question.
In few occasions, courts have been called upon to interpret an insurance policy that provides coverage for damages awarded because of 'bodily injury' or 'property damage.' This phrase has been translated to exclude punitive damages. Then again, where the insurance policy delivers coverage for 'all sums' for which the insured becomes 'legally liable for' ... as damages, it can be argued that punitive damages are included in the phrase 'all sums.' Accordingly, this language has been analyzed as to deliver coverage to the insured for punitive damages.
Awards of punitive damages are determined by multiple causes, which involve - punishment of a bad person besides deterrence of others from involving in similar behavior. Unfortunately, passing punitive damage to insurers may not deter wrongdoers from continuing their wrong actions.
Public Policy And Punitive Damages
Consequently, even in scenarios punitive damages fall within the scope of insurance coverage of product insurance policy, a court may not allow an insured to collect such loss from the insurer on the ground of public policy. In some scenarios, though, public policy may not be offended by permitting an insured to recover from its insurance firm for a punitive damage award. For instance, a business may be held liable for punitive damages for conduct done by one of its staff. Where the insured business did not take any part in the wrongful act and is only vicariously liable, neither the 'punishment' rationale nor 'deterrence' reasoning of awarding punitive damages is affected by permitting insurance coverage.
Nowadays, as punitive damage awards began to rise in frequency and size, some insurance firms start to exclude punitive damages off the risk, by clearly excluding them from insurance coverage. Consequently, although a producer gets product liability insurance, she or he should not assume all damages connected with his or her product to be included by the insurance contract.