Insurance Coverage for Punitive Damage Awards

Policyholder Advisor & Alert

PUBLISHED ON: December 1, 1995

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Despite the chronic efforts of their opponents, punitive damages are not likely to just disappear. On October 11, the Supreme Court heard oral arguments on a case concerning the constitutionality of punitive damage awards for the fifth time in six years.

In BMW v. Gore, an Alabama jury awarded $4,000 in compensatory damages and $4 million in punitive damages to the purchaser of a BMW automobile because BMW did not disclose that it had refinished paint damage to the car before selling it. BMW’s conduct was not regulated in Alabama, and was expressly legal in many states nationwide.