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Chubb Bermuda International offers a suite of high excess products that provide broad coverage and sizable capacity to meet the needs of large UK, European and international clients. Our financial lines and property products are available from operations in London.
Punitive Damages Wrap Policy
What are punitive damages?
Punitive damages serve to penalize the defendant rather than provide compensation to the plaintiff, meaning that the standard criteria used to determine compensatory awards — such as actual medical expenses and lost wages — are not considered in the evaluation of punitive damages.
What is a punitive damages wrap policy?
A punitive damages wrap policy (puni-wrap) is a standalone insurance policy issued outside of the United States (Bermuda is a preferred country) to provide coverage for punitive damages that are not otherwise payable under a traditional insurance policy. These policies “wrap around” domestic insurance policies, allowing coverage for punitive damages in jurisdictions where such indemnification is otherwise prohibited.
Puni-wraps are not subject to the same regulatory and public policy restrictions as domestic policies, enable insureds to secure coverage for punitive damages that would typically be excluded. However, puni-wrap policies are only triggered by final judgements and do not cover settlements, even if the settlement amount was influenced by potential punitive damages.
Resources
Companies who have exposures in U.S. states where the insurability of punitive damages is unsettled or restricted should consider purchasing a policy. Read Chubb Bermuda's overview document to learn more.
New data shows the risk of punitive damages by state, county and cause of action. Read this advisory for a review of punitive damages by the numbers.
Interested in a punitive damages wrap policy?
Punitive damages wrap policies, when combined with traditional insurance policies, are not restricted by the regulations or public policies that would prevent a domestic policy from covering such damages.
Chubb Bermuda can make a direct coverage grant and is not subject to U.S. insurance restrictions against providing punitive damages cover. Watch our video to learn more.
Interested in a punitive damages wrap policy?
Punitive damages wrap policies, when combined with traditional insurance policies, are not restricted by the regulations or public policies that would prevent a domestic policy from covering such damages.
Chubb Bermuda can make a direct coverage grant and is not subject to U.S. insurance restrictions against providing punitive damages cover. Watch our video to learn more.
How does a puni-wrap policy differ from a standard insurance policy?
Unlike traditional insurance policies, which are subject to domestic regulatory constraints and may be unable to cover punitive damages, puni-wraps policies operate independently and outside of these restrictions. They share a coverage limit with the domestic policy, meaning any payments made for compensatory damages under the primary policy also reduce the limits available under the puni-wrap.
Additionally, while a standard policy may cover various types of claims, a puni-wrap specifically targets punitive damages and only responds to final court judgements, not settlements. This distinction provides insureds with more certainty in securing punitive damages coverage, albeit with limitations tied to the domestic policy.
A Review of the U.S. Punitive Damages Liability Landscape
While the U.S. Supreme Court has suggested that the maximum allowable punitive-to-compensatory award ratio is 4-to-1, state courts have nonetheless applied those guidelines to uphold ratios of 16-to-1.
Those states where insurability is unsettled or restricted are where the majority of U.S. economic activity occurs and where, according to some data, a significant.
New data shows the increasing prevalence of punitive damage awards.
There are pros and cons to insurance products designed to cover punitive liability.