Punitive damages refer to financial compensation that may be awarded in insurance bad faith (or personal injury, car accident, etc.) cases in an effort to specifically punish the defendant and deter acts of future negligence that led to the lawsuit in the first place. Also referred to as exemplary damages, punitive damages do not include compensation for the plaintiff’s injuries, medical bills, mental anguish and other losses, as these factors are compensated for with compensatory damages.
Although punitive damages are typically not awarded in cases that involve contract disputes, one notable exception to this standard lies in insurance bad faith cases because they are considered (in the eyes of the court) to be so egregious and unethical that they could warrant punitive damages to deter insurance companies from ever acting in bad faith in the future.
How Punitive Damages Are Awarded
While compensatory damages are generally awarded based on the calculated expenses and the cost of losses a plaintiff has suffered (e.g. the cost of property damage, doctor’s bills, lost wages, etc.), there is no maximum amount that could cap punitive damages. This means that these awards could be as much as four times the amount of compensation awarded for compensatory damages.
Despite this fact, however, it can be difficult to prove in an insurance bad faith lawsuit that a defendant (i.e., an insurance company) should pay punitive damages; courts often demand some concrete proof of intentionally egregious behavior that would warrant such compensation. As a result, individuals who believe that they may have suffered losses as a result of insurance bad faith should contact the lawyers at Brown & Brown, LLP for the best chances of securing the maximum possible compensation in their insurance bad faith cases.
For a free review of your case, including the compensation to which you might be entitled, dial 3s in the St. Louis area (314-333-3333 / 573-333-3333) or dial 8s in and around Illinois (618-888-8888).