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 States that Cover Punitive Damages.

If you live in a state that doesn't, will your assets survive an attack?

In 27 States, Insurance Policies
CAN NOT Cover Punitive Damages!

First, what are punitive damages and why is that important to your net worth? Punitive damages have been historically awarded to discourage intentional wrongdoing, wanton and reckless misconduct and outrageous behavior. The majority of courts in the United States, hold that punitive damages are not compensation for injury, but, instead, are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence.

Traditionally, the level of punitive damages sought by plaintiffs and awarded in civil actions was based upon the severity of a defendant's acts. However, with increasing frequency, the plaintiff's attorneys contend that for punitive damages to act both as an adequate punishment for wanton/willful conduct, and an effective deterrent against future conduct, the level of punitive damages awarded should bear some relation to the relative wealth of the defendant. Simply stated, it is often the wealth of the defendant and not the nature of his acts, which dictate the level of punitive damages awarded to plaintiffs.

In many states, insurance policies cannot cover punitive damages. These states are: Arkansas (when arising from an intentional tort), California, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Missouri, Nebraska, Nevada (when arising from wrongful act committed with an intent to injure), New Jersey, New York, North Carolina (when arising from an intentional tort), North Dakota (when arising from an intentional act), Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee (when arising from an intentional wrong), Utah, Virginia (when arising from an intentional wrong), and Washington. See Barry R. Ostrager & Thomas R. Newman, Handbook on Insurance Coverage Disputes, 10th ed. (Aspen Law & Business 2000), § 14.06 at 847-862.

Similarly, errors and omission clauses in comprehensive general liability policies do not cover intentional acts, only accidents. See Eric Mills Holmes, Holmes' Appleman on Insurance 2d., vol. 16 (Lexis Publishing 2000), §§ 116.4, 117.4. Thus, E & O clauses may not be very effective in preserving assets. Finally, if you are sued and punitive damages are involved and you live in a state where your insurance does not cover you, your personal assets will be at risk! Call NCP at (800) 351-5111 and we will help solve this problem for you!

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