Punitive Damages can Destroy Your Company

To stay protected, know your coverage, train your drivers, and enforce your policy

You may think you have all your bases covered. But whether you self-insure or buy a policy from an insurance company, your commercial auto liability insurance may be leaving a hefty gap. Do you know what your protection is against punitive damage awards?

This is the topic covered by Automotive Fleet editor Mike Antich in a recent Market Trends blog. Antich turned to Tracy Decker, Holman Risk Partners vice president of commercial insurance operations, to provide an expert’s perspective on the complex topic of corporate risk management.

Businesses that self-insure their fleets are protecting themselves from accident costs associated with vehicle damage. Other fleets choose large deductibles instead. In either case, a business may use commercial auto liability insurance to cover bodily injury, property damage and third-party liability claims. Nonetheless, these fleets still may not be covered against punitive damages.

After a severe accident, a jury can award punitive damages for property damage and/or bodily injuries. It is a common misconception that a commercial liability policy will pay for the punitive damage in all cases. In the U.S., each state establishes its own punitive damages guidelines; in some states, it’s illegal to circumvent punitive damage.

“An award of punitive damages in a single case can destroy an otherwise healthy business,” said Decker. “A good start to minimize the possibility of punitive damages is to establish a strong safety program and enforcing driver policy without exceptions.”

Learn more about how to be a crucial component in helping to minimize your company’s liability exposure. Read: Punitive Damages May Not be Covered by Commercial General Liability Insurance.