What are Punitive Damages and Does Your Trucking Insurance Cover It?

Strong Tie Insurance February 18, 2020 Commercial Truck Insurance StrongtieInsurance

Many states have rules in place that allow parties to seek punitive damages in some civil cases. If the court views your actions as especially wrongful, they might award punitive damages on top of actual damages. While your commercial trucking insurance is meant to help cover physical damages and bodily injuries if you have the right policies, punitive damages are an entirely different story.

Here is what you need to know about punitive damages and your truck insurance:

What Are Punitive Damages?

Punitive damages are awards on top of general awards provided by the court. The goal of punitive damages is to punish the defendant for gross misconduct, wanton, or harmful actions. These awards aren’t part of every court case but can be added if the court deems it necessary to help reform the defendant and help the plaintiff become whole. For the truck driver and the trucking company, punitive damages are the worst-case scenario for an already bleak situation.

The good news is that punitive damages are not on the table for mere negligence. This is not to say that an accident could have been avoided had the driver been more careful, there needs to be evidence of willful and wanton conduct; which typically means the accident was caused by intentional or utter indifference. That means the defendant knew his behavior was wrong but continued doing so at the risk of himself and others.

How Are Punitive Damages Asserted in Truck Accident Cases?

After an incident occurs, one or more of the parties involved can file a civil lawsuit. This lawsuit takes place outside of the work done by the police or commercial insurance companies. The police may issue citations or even make arrests depending on the exact situation. Trucking insurance companies will gather information and take the next necessary steps. Even if you think the incident is behind you, there could still be a civil suit.

The plaintiff has to show that there is a reasonable basis for recovery of damages. In many cases, the defendant will object to the idea of punitive damages being added. In which case, there will be a separate hearing to determine if punitive damages are on the table. If this hearing allows punitive damages, there is no guarantee that they’ll be awarded. They can, however, be considered in the main trial.

When Are Punitive Damages Awarded?

To actually recover punitive damages, the plaintiff must show that the defendant engaged in intentional misconduct or gross negligence. In most cases with truck accidents involving punitive damages, the driver was deemed reckless enough to show he was indifferent to the safety or rights of others.

A pattern of violating safety regulations can often be used to fit the definition of gross negligence. If, for example, a driver has a history of texting while driving his 18-wheeler, an accident caused by distracted driving could meet the requirements for gross negligence. This is different from a driver who drives distracted one time and creates a collision. That’s not to say a single act of negligence couldn’t be used to this end, but harmful patterns of poor choices never help the driver.

In some states, trucking companies can also be held liable for punitive damages due to one of its drivers. Many lawyers will name both the driver and the trucking company in the lawsuit in hopes of getting a better payout. For the trucking company to be part of the punitive damages, it must have knowingly participated and condoned in the misconduct.

If the trucking company knew one of its drivers regularly texted while driving but did nothing about it, the company could be held liable for the accident. The same is true if the company had policies that forced drivers to break laws or regulations.

Does My Insurance Cover Punitive Damages?

Most people assume that if they have liability insurance, they are covered for any damages they cause. Many insurance policies exclude punitive damages, aren’t very clear, or are intentionally vague. Some state courts have ruled that policies that don’t say otherwise should include punitive damages. In these situations, the term “damages” is vague enough that it covers everything. Other courts focus on coverages that specify covering bodily injury or property damage and believe this excludes punitive damages.

Insurance companies have another option. Since punitive damages are only awarded if the accident was caused by intentional acts or gross misconduct, there is an out. Most commercial truck insurance policies exclude coverage for losses caused by deliberate acts and gross misconduct. Essentially, most insurance policies won’t cover direct actions that lead to an accident.

In some states, courts don’t allow insurance companies to cover punitive damages as a point of policy. If the idea of punitive damages is to punish the offender for gross misconduct, having an insurance company pay the fine doesn’t complete the goal. Other states allow insurance companies to cover punitive damages so long as the policy doesn’t say otherwise. Where the case is filed plays a considerable role. If an accident happens in Pennsylvania, for example, the state doesn’t allow for punitive damages cannot be covered by insurance. The plaintiff could potentially file in another state if the company is headquartered somewhere that allows punitive damages to be paid by insurance. This kind of maneuvering can be used to pressure insurance companies to settle out of court versus battling the case in a state that might allow a bigger payout.

Talk to Strong Tie Insurance Today

Since knowing if your commercial trucking insurance covers punitive damages can depend on several factors, your best bet is to talk to a company that understands insurance inside and out. As one of the country’s leading insurance companies, Strong Tie Insurance can not only help you find the right policy for your trucking needs but can make sure you’re not overpaying for policies you don’t need. More importantly, we have options to help customers who have concerns regarding punitive damages. Give us a call today and get a free quote and evaluation of your trucking insurance needs!