Usually, punitive damages are awarded only if there has been proof of intentional bad acts, and most insurance policies also exclude coverage for damages caused by intentional acts of the insured. Co., 2019 IL App (1st) 181501 (May 3, 2019), the Illinois Appellate Court addressed whether and when allegations of punitive damages not covered by an insurance ⦠A serious car accident can lead to emergency medical care, multiple procedures, a need for continued care, and months off ⦠Insurance Coverage When Cyber Attacks Result in Physical Damage Shareholder Lawsuits Arising from Cyber-Incidents and Implications for Potential Insurance Coverage Industry News But when a court grants such approval, the Id. Basic Law Under Section 155 of the Illinois Insurance Code, an insured or an assignee may recover damages from an insurer if the insurer disputes the amount of the loss payable on a claim, delays settling a claim, or refuses to provide coverage and the insurerâs Illinois allows insurance coverage for punitive damages in the case of vicarious liability only. B. Steadfast Ins. There are other jurisdictions that have allowed punitive damages in certain cases where the insurance company's bad faith was particularly egregious. State laws regarding punitive or exemplary damage exclusions can vary in other ways. SECTION 155 OF THE ILLINOIS INSURANCE CODE â FIRST PARTY CLAIMS 1. However, the insurer reserved the right to deny coverage for punitive damages. The table below shows the insurability of punitive damages by state. During the resulting coverage action, the insurer advised the insured that it would defend and indemnify the insured for any compensatory damages arising from the lawsuit and would not assert any exclusions or defenses to coverage. However, other courts approve insurance coverage for punitive damages, claiming that the deterrent effect of punitive damages has nothing to do with the insurance coverage itself and that the policy of insured, which covers all awarded damages, should be honored. Gallant notes that no Illinois case has ever authorized common law punitive damages against an insurance carrier based upon a bad-faith refusal to settle a third party's liability claim. Id The first reported punitive damages award in this country was Genay v. Norris, 1. Recently, in Xtreme Protection Services., LLC v.Steadfast Ins. Therefore, no punitive or exemplary damages exclusion is needed for the insurance companies in those states to avoid paying awards for punitive damages. While Illinois has provided a baseline for insurance coverage, a policy limit of $25,000 or $50,000 may not be enough to fully compensate you for your injuries. Eight states prohibit insurance coverage of punitive damages: California, Colorado, Kansas, Maine, Minnesota, New York, North Dakota and Idaho. Illinois Coverage Basics Insurability of Punitive Damages in Illinois and How a Punitive Damages Claim Impacts the Duty to Defend In most tort actions for bodily injury or property damage in Illinois, claims for punitive damages cannot be pleaded without prior court approval. In addition, claims for punitive damages, which are not covered by insurance policies and may not be vigorously defended by the insurer, may require the provision of independent counsel.
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