Punitive damages are additional type of damages that go beyond merely compensating a person for the injuries they have incurred. Punitive damages are imposed to teach the person that caused the injuries a lesson. Punitive damages are punishment for the egregious wrong that the person or company has committed. Given that punitive damages are the civil law's form of punishment – not merely compensation for the damages actually incurred, it may seem strange that an insurance policy may be responsible for punitive damages.
However, unless a policy of insurance specifically excludes from coverage punitive damages, the insurance policy is held to cover punitive damages. That is the default position under Georgia law:
The question presented is whether Flynn is entitled to punitive damages or to any damages under the bodily injury portion of the insurance policy at issue. Flynn correctly argues that punitive damages are available from an insurance company unless the insurance company has specifically exempted such damages in its policy.2 Since Allstate did not specifically exclude punitive damages in its policy, it has exposed itself to a punitive damage claim.
Flynn v. Allstate Ins. Co., 268 Ga. App. 222, 222, 601 S.E.2d 739, 740 (2004).
Georgia personal injury and insurance law has consistently held that the terms of an insurance policy are to be construed broadly to provide coverage and construed against the insurer that is responsible for the drafting of the policy:
The insurance policy provides the following with regard to coverage: *5 “We will pay, on behalf of an insured person, damages for which any insured person is legally liable because of bodily injury and property damage arising out of an accident involving your insured car or a non-owned car.” We do not agree with Peachtree that this language plainly “does not provide coverage for punitive damages.” On the contrary, the language of the policy leads to the opposite conclusion. The coverage language is broad, encompassing “damages” without limitation. Although it contains an exclusion for bodily injury or property damage caused by intentional acts, the policy does not contain an exclusion for punitive damages. And the law is clear in this state that an insurer, “having affirmatively expressed coverage in broad promissory terms, has a duty to define any limitations or exclusions clearly and explicitly.” (Citations and punctuation omitted.) MAG Mut. Ins. Co. v. Gatewood, 186 Ga.App. 169, 173, 367 S.E.2d 63 (1988).
It is true, as argued by Peachtree, that the definitions section of the policy defines bodily injury, property damage, and accident without reference to punitive damages. And, as further argued by Peachtree, the policy does not expressly recite that it will pay “all sums” that its insured could recover. But the failure to use this language or to specifically reference punitive damages in the definitions section does not prevent coverage. Had Peachtree wished not to cover or to exclude punitive damages, it could have done so clearly and specifically. It did not, and consequently it is bound by the broad language of the policy.
Lunceford v. Peachtree Cas. Ins. Co., 230 Ga. App. 4, 4–5, 495 S.E.2d 88, 89 (1997).
If you have a question about insurance coverage in a personal injury or property damage claim, contact The Sessions Law Firm, LLC today.
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The Sessions Law Firm, LLC
544 Mulberry St., Ste. 319
Macon, Georgia 31201
Phone: (478) 254-2665