Skip to main content

Fines Punitive Damages Exemplary Damages Exclusion

 

                          Fines Punitive Damages Exemplary Damages Exclusion

 

Coverages under a liability policy are ambiguous, but certain clarity can be requested from the Insurer. However exclusions under the policies cannot be changed especially the Fines Punitive Damages Exemplary Damages Exclusion.

Exclusion under the Liability policy states:

It is hereby declared and agreed that this Policy excludes all sums which the Insured shall become legally liable to pay as fines, penalties, punitive or exemplary damages in consequence of an award against the Insured made in any Civil Court.

While defense costs are paid for in a claim one may wonder, why not fines and punitive damages.

Fines and damages are also a financial loss to the client in line with the defense costs. Here it is important to understand the difference.

Ø  Defense costs are paid to defend the claim and properly present the case with all the correct and relevant pleas.

Ø  Fines penalty exemplary damages are awarded by the court for offences committed and for prevention of such offences being committed.

Let us examine the definition in detail:

Ø  A Fine is a penalty that requires the convicted person to pay to the public treasure a sum of money fixed by law after an offense has been committed. The fine may be increased if not paid within the stipulated time.

Ø  Punitive damages are awarded by a jury or a judge, in addition to actual damages, which compensate a petitioner for the losses suffered due to the harm caused by the defendant.

Punitive or exemplary damages do not pay for bodily injuries or property damage. They are awarded over and above payment for those items.

Calculation of punitive damages varies with each case.There is no set formula for arriving at such damages. The amount awarded will depend on the facts relating to the defendant's conduct. The court has the duty to maintain balance and ensure punishment that is not excessive.

Ø  Exemplary damages are paid by the one who has committed an offence .It is awarded without precedent and aims at  preventing others from committing similar offences in the future

An award is given to victims when the conduct of the individual who caused the victim harm is willfully malicious, and grossly reckless.

 Insurance contract is a legal contract and any wrongful act; error must not be willful, with wrong motives & criminal intent. Since the courts award such fines and damages after finding the intent and motives, insurance cover is not available for such actions. This is against public policy, contrary to law and hence not covered.

 

We at Zen Insurance  assist in understanding the insurance cover. Please contact us for assistance.

 Disclaimer:   

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products

 

 

 

 

 

 

 

Comments

Post a Comment

Popular posts from this blog

Insurance in a Time of Conflict: The Truth About War Risk Coverage

  In the wake of the recent confrontation between India and Pakistan through Operation Sindoor, a question in the minds of those with an insurance policy was if their policy will cover war-related damages. Our clients were no exception; we got queries on insurance coverage for wars during this period. War seemed a remote possibility until Operation Sindoor, but this operation made everyone believe that war was a reality and prompted the exploration of insurance coverage for such an incident.  In this blog, we will explore the coverage for war in insurance policies. War Coverage in Insurance Policies Most insurance policies—whether for property, auto, life, health, or travel—include a war exclusion clause . This clause denies coverage for losses or damages resulting directly or indirectly from war, invasion, civil unrest, rebellion, insurrection, or military action. Importantly, this exclusion generally applies even if war is not officially declared. Declared Wars: When...
Post a Comment
Read more

AOG (Act of God) Perils Extension in CGLpolicies

      A OG (Act of God) Perils Extension in Commercial General Liability (CGL) policies refers to the inclusion of natural and unpredictable events under the coverage of the policy. AOG perils are events beyond human control, often caused by natural forces, and their inclusion can significantly broaden the scope of a standard CGL policy. These perils are not covered automatically in a CGL but have to be purchased separately as an add-on. Let us look at this aspect of CGL policies in more detail. Indian firms looking to buy a CGL policy should ideally opt for an AOG perils extension because the country is geographically prone to various natural disasters such as earthquakes, cyclones, and floods. Including AOG perils in a CGL policy will help businesses in disaster -prone areas to protect against liabilities arising from damage or injury caused during such events. AOG Perils covered in a CGL policy Earthquake Floods (including inundation, cloudburst, etc.)...
Post a Comment
Read more

What Group Health Insurance Doesn't Cover: Key Exclusions You Must Know

  Many employees covered under a group health insurance policy are under the impression that this policy will cover any cost they incur for illness or hospitalization. But the fact is the insurance cover by a group health insurance policy has several exclusions which employees discover much later. Due to these exclusions, an employee who has to undergo medical treatment might not get the required coverage due to exclusions, which can cost him financially and emotionally. Employees need to be aware of what is not covered in a group health insurance policy so that when medical treatment is necessary for them or their family members, they know whether coverage is available or not and they can be in a better position by taking a personal health insurance policy. In this blog, we will focus on exclusions in a group health insurance policy. What are exclusions in group health insurance? Exclusions are conditions or treatments that a group health insurance policy will not cover...
Post a Comment
Read more