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JURISDICTIONAL ANALYSIS

We provide below our analysis of the insurability of punitive damages in the fifty United States and in the District of Columbia. Our analysis addresses the insurability of both directly assessed and vicariously assessed punitive damages. All citations to the decisions of the courts of individual states are to the highest appellate tribunal of each state unless otherwise specifically noted. Federal authority includes both District Courts and Courts of Appeals.

ALABAMA
Alabama courts have held that directly assessed punitive damages are insurable. See Omni Ins. Co. v. Foreman, 802 So. 2d 195 (Ala. 2001); Capital Motor Lines v. Loring, 189 So. 897 (Ala. 1939); Employers Ins. Co. v. Brock, 172 So. 671 (Ala. 1937); American Fidelity & Cas. v. Werfel, 164 So. 383 (Ala. 1935).

Vicariously assessed punitive damages would likely be insurable in Alabama because directly assessed punitive damages are insurable. See also Armstrong v. Security Ins. Group, 288 So. 2d 134 (Ala. 1973) (finding no public policy prohibition against indemnification of an insured for the wrongdoing of another).

ALASKA
Directly assessed punitive damages are insurable in Alaska. In Aetna Cas. & Surety Co. v. Marion Equipment Co., 894 P.2d 664 (Alaska 1995), the Supreme Court of Alaska clearly states, though arguably in dictum, that liability for punitive damages can be insured. A federal district court opinion similarly held that Alaska law had no public policy prohibition against coverage for punitive damages arising out of grossly negligent conduct. LeDoux v. Continental Ins. Co., 666 F. Supp. 178 (D. Alaska 1987); see also Providence Washington Ins. Co. of Alaska v. City of Valdez, 684 P.2d 861, 862 (Alaska 1984) (holding that the “all sums” language in an insurance policy includes punitive damages).

Although there is no precedent directly on point, vicariously assessed punitive damages would likely be insurable in Alaska because directly assessed punitive damages are insurable. See Providence Washington Ins. Co. of Alaska, 684 P.2d 861 (indicating, in dicta, that a “considerable body” of authority existed in other states permitting coverage for vicariously awarded punitive damages).

ARIZONA
Directly assessed punitive damages are insurable in Arizona. See Price v. Hartford Accident & Indem. Co., 502 P.2d 522 (Ariz. 1972) (finding no public policy prohibition against insurance coverage for punitive damages arising out of gross negligence, wantonness, or recklessness).

Vicariously assessed punitive damages arising out of gross negligence, wantonness, or recklessness would likely be insurable in Arizona because directly assessed punitive damages arising out of such conduct are insurable. Id.State v. Sanchez, 579 P.2d 568 (Ariz. Ct. App. 1978).

ARKANSAS
Directly assessed punitive damages are insurable in Arkansas; however, the Arkansas Supreme Court makes a distinction between awards arising from accidents and those arising from intentional torts. Unigard Sec. Ins. Co. v. Murphy Oil USA, Inc., 962 S.W.2d 735 (Ark. 1998); Southern Farm Bureau Cas. Ins. Co. v. Daniel, 440 S.W.2d 582 (Ark. 1969). Public policy prevents indemnification for intentional conduct. Id.

Vicariously assessed punitive damages are also insurable in Arkansas. Id.

CALIFORNIA
Directly assessed punitive damages are not insurable in California. See PPG Industries, Inc. v. Transamerica Ins. Co., 975 P.2d 652 (Cal. 1999); Peterson v. Superior Court, 642 P.2d 1305 (Cal. 1982); Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc., 17 Cal. Rptr. 2d 713 (Cal. Ct. App. 1993); City Products Corp. v. Globe Indem. Co., 151 Cal. Rptr. 494 (Cal. Ct. App. 1979). In addition, California Insurance Code § 533, which provides that “an insurer is not liable for a loss caused by the willful act of the insured,” is an implied exclusionary clause statutorily read into all insurance policies. J.C. Penney Cas. Ins. Co. v. M. K., 804 P.2d 689 (Cal. 1991), cert. denied, 502 U.S. 902 (1991) (finding coverage for inherently wrongful acts, but not negligent or reckless acts, precluded by § 533).Accord Save Mart Supermarkets v. Underwriters at Lloyd’s London, 843 F. Supp. 597 (N.D. Cal. 1994).

In certain circumstances, vicariously assessed punitive damages are insurable in California. A California Supreme Court case held that § 533 “has no application to a situation where the [insured] is not personally at fault.” Arenson v. Nat’l Auto. and Cas. Ins. Co., 286 P.2d 816 (Cal. 1955). See also J.C. Penney Cas. Ins. Co., 804 P.2d 689 (holding that § 533 does not preclude coverage for negligent acts). Cf. Certain Underwriters at Lloyd’s of London v. Pacific Southwest Airlines, 786 F. Supp. 867 (C.D. Cal. 1992) (suggesting that the vicarious liability exception to § 533 might apply in successor liability cases). However, another California statute limits when vicariously assessed punitive damages can be imposed. Section 3294 of the California Civil Code states that an employer cannot be liable for damages caused by the “oppression, fraud, or malice” of an employee, unless the employer is guilty of negligently hiring the offending employee or of ratifying the wrongful conduct.

COLORADO
Directly assessed punitive damages are not insurable in Colorado. Bohrer v. Church Mut. Ins. Co., 12 P.3d 854 (Colo. Ct. App. 2000); Lira v. Shelter Ins. Co., 913 P.2d 514 (Colo. 1996); Universal Indem. Ins. Co. v. Tenery, 39 P.2d 776 (Colo. 1934).

The question of whether vicariously assessed punitive damages are insurable in Colorado has not been decided.

CONNECTICUT
Directly assessed punitive damages are not insurable in Connecticut. Bodner v. United Services Auto. Ass’n, 610 A.2d 1212 (Conn. 1992); Caulfield v. Amica Mut. Ins. Co., 627 A.2d 466 (Conn. App. Ct. 1993); St. Paul Fire & Marine Ins. Co. v. Shernow, 610 A.2d 1281 (Conn. 1992) (holding that it is contrary to public policy to insure against punitive damages arising from intentional wrongdoing).

The Connecticut Supreme Court held that vicariously assessed multiple damages awarded pursuant to statute was an insurable risk. Avis Rent A Car System, Inc. v. Liberty Mut. Ins. Co., 526 A.2d 522 (Conn. 1987).

DELAWARE
Directly assessed punitive damages are insurable in Delaware. Whalen v. On-Deck, Inc., 514 A.2d 1072 (Del. 1986); see also Jones v. State Farm Mut. Auto. Ins. Co., 610 A.2d 1352, 1354 (Del. 1992).

Vicariously assessed punitive damages would likely be insurable in Delaware because directly assessed punitive damages are insurable.

DISTRICT OF COLUMBIA
The insurability of directly assessed punitive damages in the District of Columbia is not clear, as no court has issued a decision in this regard. Case law suggests that directly assessed punitive damages probably would not be insurable for intentional acts. See Pray v. Lockheed Aircraft Corp., 644 F. Supp. 1289 (D.D.C. 1986) (stating that insurance for punitive damages “may” be against public policy); Salus Corp. v. Cont’l Cas. Co., 478 A.2d 1067, 1070 (D.C. 1984) (suggesting that allowing insurability of punitive damages may be contrary to public policy); In re Estate of Corriea, 719 A.2d 1234 (D.C. 1998) (indicating that the question of indemnification for punitive damages was left open in the Salus case). However, punitive damages assessed for negligent, rather than intentional conduct, might be insurable. See Hartford Life Ins. Co. v. Title Guarantee Co., 520 F.2d 1170 (D.C. Cir. 1975) (stating, in dicta, that public policy would prohibit insurance for intentional or knowledgeable wrongdoing, but that “a person may insure himself against the results of his own negligent violations of law.” Id. at 1175).

The insurability of vicariously assessed punitive damages in the District of Columbia has not been decided.

FLORIDA
Directly assessed punitive damages are not insurable in Florida. See U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061 (Fla. 1983); Morgan Int’l Realty, Inc. v. Dade Underwriters Ins. Agency, Inc., 617 So. 2d 455 (Fla. Dist. Ct. App. 1993); Country Manors Ass’n, Inc. v. Master Antenna Systems, Inc., 534 So. 2d 1187 (Fla. Dist. Ct. App. 1988).

Vicariously assessed punitive damages, however, are insurable in Florida. U.S. Concrete Pipe Co., 437 So. 2d 1061. See also Highlands Ins. Co. v. McCutchen, 486 So. 2d 4 (Fla. Dist. Ct. App. 1986).

GEORGIA
Directly assessed punitive damages are insurable in Georgia. See Greenwood Cemetery v. Travelers Indem. Co., 232 S.E.2d 910 (Ga. 1977); Federal Ins. Co. v. Nat’l Distributing Co., Inc., 417 S.E.2d 671 (Ga. Ct. App. 1992).

Vicariously assessed punitive damages would likely be insurable in Georgia because directly assessed punitive damages are insurable.

HAWAII
Directly assessed punitive damages are insurable in Hawaii. However, coverage will not be implied. Insurance policies issued in the state “shall not be construed to provide coverage for punitive or exemplary damages unless specifically included.” Haw. Rev. Stat. § 431:10-240 (2003). See also CIM Ins. Corp. v. Midpac Auto Center, Inc., 108 F. Supp. 2d 1092 (D. Hawaii 2000).

Vicariously assessed punitive damages would likely be insurable in Hawaii because directly assessed punitive damages are insurable.

IDAHO
Directly assessed punitive damages are insurable in Idaho. See Abbie Uriguen Oldsmobile Buick, Inc. v. U.S. Fire Ins. Co., 511 P.2d 783 (Idaho 1973).

Vicariously assessed punitive damages would likely be insurable in Idaho because directly assessed punitive damages are insurable.

ILLINOIS
Directly assessed punitive damages are not insurable in Illinois. See Beaver v. Country Mut. Ins. Co., 420 N.E.2d 1058 (Ill. App. Ct. 1981); see also Wausau Ins. Co. v. Valspar Corp., 594 F. Supp. 269 (N.D. Ill. 1984) (citing Beaver v. Country Mutual for authority that Illinois public policy would prohibit insurance for punitive damages that could be awarded against a corporation accused of reckless and wanton storage of chemical wastes).

Vicariously assessed punitive damages, however, are insurable in Illinois. See Scott v. Instant Parking, Inc., 245 N.E.2d 124 (Ill. App. Ct. 1969). See also U.S. Fidelity & Guar. Co. v. Open Sesame Child Care Center, 819 F. Supp. 756 (N.D. Ill. 1993); Beaver v. Country Mutual Ins., 420 N.E.2d 1058 (stating that that an employer may insure himself against vicarious liability for punitive damages assessed against him in consequence of the wrongful conduct of his employee).

INDIANA
Directly assessed punitive damages are not insurable in Indiana. Although no decision of the Indiana Supreme Court has yet addressed this issue, two federal district court decisions have suggested that Indiana courts would not allow coverage for directly assessed punitive damages. Grant v. North River Ins. Co., 453 F. Supp. 1361 (N.D. Ind. 1978); Norfolk & Western Railway Co. v. Hartford Accident & Indem. Co., 420 F. Supp. 92 (N.D. Ind. 1976). In addition, the Indiana Court of Appeals held in Shuamber v. Henderson, 563 N.E.2d 1314 (Ind. Ct. App. 1990), adopted in part, vacated in part, 579 N.E.2d 452 (Ind. 1991), that punitive damages were not recoverable under Indiana’s underinsured motorist statute.

Vicariously assessed punitive damages, however, are insurable in Indiana. See Norfolk & Western Railway Co., 420 F. Supp. 92 (stating that it “would not be inconsistent with public policy” to allow insurability of punitive damages based upon vicarious liability); See also Grant, 453 F. Supp. 1361.

IOWA
Directly assessed punitive damages are insurable in Iowa. See Skyline Harvestore Systems, Inc. v. Centennial Ins. Co., 331 N.W.2d 106 (Iowa 1983) (stating that if insurance companies do not wish to provide coverage for punitive damages, “then they must exclude coverage of punitive damages specifically”) Id. at 109.

While there is no case on point, vicariously assessed punitive damages also would likely be insurable in Iowa, because directly assessed punitive damages are insurable.

KANSAS
Directly assessed punitive damages are not insurable in Kansas. See Hartford Accident & Indem. Co. v. American Red Ball Transit Co., Inc., 938 P.2d 1281 (Kan. 1997), cert. denied, 522 U.S. 951 (1997); Guardianship of Estate of Smith, 507 P.2d 189 (Kan. 1973).

Vicariously assessed punitive damages, however, are insurable in Kansas (for policies issued after April 26, 1984). See Kan. Stat. Ann. § 40-2,115 (West 2003);Southern American Ins. v. Gabbert-Jones, Inc., 769 P.2d 1194 (Kan. Ct. App. 1989).

KENTUCKY
Directly assessed punitive damages are insurable in Kentucky. The court in Continental Ins. Co. v. Hancock, 507 S.W.2d 146 (Ky. Ct. App. 1973), however, distinguished between punitive damages imposed for an insured’s grossly negligent acts, which are insurable, and punitive damages based on intentional wrongs, which are not.

Vicariously assessed punitive damages are also insurable in Kentucky. Id. (in dicta).

LOUISIANA
Directly assessed punitive damages are insurable in Louisiana. Sharp v. Daigre, 555 So. 2d 1361 (La. 1990) (no public policy prohibition against insurance recovery for punitive damages under an uninsured motorist policy); see also Louviere v. Byers, 526 So. 2d 1253 (La. Ct. App. 1988), writ denied, 528 So. 2d 153 (La. 1988) (no public policy prohibition against the insurability of punitive damages which were awarded pursuant to a statute authorizing exemplary damages to be assessed against drunk drivers). However, Louisiana state appellate courts have stated that punitive damages assessed for voluntary and intentional acts are not insurable. See Baltzar v. Williams, 254 So. 2d 470 (La. Ct. App. 1971); Swindle v. Haughton Wood Co., Inc., 458 So. 2d 992 (La. Ct. App. 1984); Vallier v. Oilfield Construction Co., Inc., 483 So. 2d 212 (La. Ct. App. 1986), writ denied, 486 So.2d 734 (La. 1986) (holding that it would be against public policy to allow a party to obtain insurance coverage for its voluntary and intentional wrongful acts).

Vicariously assessed punitive damages are also insurable in Louisiana. See Creech v. Aetna Cas. & Surety Co., 516 So. 2d 1168 (La. Ct. App. 1987); Swindle, 458 So.2d at 995 (holding that “public policy does not forbid one to insure against the intentional acts of another for which he may be vicariously liable.”).

MAINE
DirectlyAlthough no Maine state court has dealt with the insurability of punitive damages in any cases other than those involving uninsured motorist coverage, it appears that directly assessed punitive damages are not insurable in Maine. See Braley v. Berkshire Mut. Ins. Co., 440 A.2d 359 (Me. 1982) (holding that, based upon a construction of the policy language and consideration of the purposes of uninsured motorist coverage, punitive damages awarded for reckless conduct were not insurable under an uninsured motorist policy); but see Tuttle v. Raymond, 494 A.2d 1353, 1360 (Me. 1985) (noting that “many issues concerning the availability of punitive damages, which are not raised by this case, remain for future consideration and resolution…[including issues such as] whether one can insure against the assessment of punitive damages.”)

The question of whether vicariously assessed punitive damages are insurable in Maine has not been decided. In Tuttle, the Maine Supreme Court questioned whether punitive damages could be vicariously assessed under Maine law. Id. However, the federal district court in Concord General Mut. Ins. Co. v. Hills, 345 F. Supp. 1090 (D. Me. 1972), held that an automobile liability policy provided coverage for vicariously assessed punitive damages.

MARYLAND
Directly assessed punitive damages are insurable in Maryland. First Nat’l Bank of St. Mary’s v. Fidelity and Deposit Co., 389 A.2d 359 (Md. 1978); accord Medical Mut. Liability Ins. Society of Maryland v. Miller, 451 A.2d 930 (Md. Ct. Spec. App. 1982); Alcolac, Inc. v. St. Paul Fire & Marine Ins. Co., 716 F. Supp. 1541 (D. Md. 1989).

Vicariously assessed punitive damages would likely be insurable in Maryland because directly assessed punitive damages are insurable.

MASSACHUSETTS
Directly assessed punitive damages are not insurable in Massachusetts. In Santos v. Lumbermens Mut. Cas. Co., 556 N.E.2d 983 (Mass. 1990), the court found no coverage for punitive damages under an underinsured motorist policy or the Massachusetts underinsurance statute. However, the court also stated that, its finding notwithstanding, it did not address the broader issue of “whether a tortfeasor’s insurer may be obliged to pay for punitive damages.” Id. at 991, n. 17. It should also be noted that punitive damages are not awarded in Massachusetts unless authorized by statute. See, e.g., Schiller v. Strangis, 540 F. Supp. 605 (D. Mass. 1982).

The issue of whether vicariously assessed punitive damages are insurable in Massachusetts has not been decided.

MICHIGAN
Although neither the Michigan Supreme Court nor the Michigan Court of Appeals has addressed the insurability of punitive damages, the case law indicates that directly assessed punitive damages are insurable in Michigan. See Meijer, Inc. v. General Star Indem. Co., 826 F. Supp. 241, 247 (W.D. Mich. 1993), aff’d, 61 F.3d 903 (6th Cir. 1995) (holding that while “[n]o Michigan case has squarely addressed the issue of insurability of punitive damages,” “it appears that Michigan law permits recovery.”) However, Michigan only allows “exemplary damages” as an additional element of compensation to the plaintiff. Yamaha Motor Corp. v. Tri-City Motors and Sports, Inc., 429 N.W.2d 871 (Mich. Ct. App. 1988). Consequently, considering the compensatory nature of the award, there should be no public policy prohibition against coverage for directly assessed exemplary damages. It should also be noted that in Vigilant Ins. Co. v. Kambly, 319 N.W.2d 382 (Mich. Ct. App. 1982), the court held that a professional liability policy covered a claim based upon seduction of a psychiatric patient even though the insurer argued that the insured’s conduct was intentional, and that public policy should prohibit coverage for such conduct.

Vicariously assessed punitive damages in Michigan would likely be insurable because directly assessed punitive damages are insurable.

MINNESOTA
Directly assessed punitive damages are, in most instances, not insurable in Minnesota. Rosenbloom v. Flygare, 501 N.W.2d 597 (Minn. 1993); U.S. Fire Ins. Co. v. Goodyear Tire & Rubber Co., 726 F. Supp. 740, 742 (D. Minn. 1989), aff’d, 920 F.2d 487 (8th Cir. 1990) (reaffirming the general prohibition by stating that “as a general rule, insurance coverage for punitive damages is void as against Minnesota public policy.”) The Minnesota Supreme Court, however, recognized an exception to this rule in Wojciak v. Northern Package Corp., 310 N.W.2d 675 (Minn. 1981), for an award of treble statutory damages for a wrongful discharge claim.

Vicariously assessed punitive damages are insurable in Minnesota. Lake Cable Partners v. Interstate Power Co., 563 N.W.2d 81 (Minn. Ct. App. 1997); Perl v. St. Paul Fire & Marine Ins. Co., 345 N.W.2d 209 (Minn. 1984).

MISSISSIPPI
Generally, directly assessed punitive damages are insurable in Mississippi. See James W. Sessums Timber Co., Inc. v. McDaniel, 635 So. 2d 875 (Miss. 1994);Old Security Cas. Ins. Co. v. Clemmer, 455 So. 2d 781 (Miss. 1984), motion to correct judgment denied in part, sustained in part, 458 So. 2d 732 (Miss. 1984);Anthony v. Frith, 394 So. 2d 867 (Miss. 1981). However, in State Farm Mut. Auto. Ins. Co. v. Daughdrill, 474 So. 2d 1048 (Miss. 1985), the Mississippi Supreme Court held that, despite the general allowance of insurability of punitive damages, the Mississippi uninsured motor vehicle statute did not allow for the recovery of punitive damages (although the court explicitly stated that its decision did not alter its prior holdings allowing for coverage of punitive damages under other liability coverage).

Vicariously assessed punitive damages would likely be insurable in Mississippi because directly assessed punitive damages are insurable.

MISSOURI
Directly assessed punitive damages are insurable in Missouri where the policy specifically provides for such coverage. For example, in Colson v. Lloyd’s of London, 435 S.W.2d 42 (Mo. Ct. App. 1968), the court held that a policy insuring police officers against all losses imposed by law covered punitive damages. Recognizing the importance of upholding contracts and the unusual nature of police work, the court concluded that insuring against punitive damages did not violate Missouri’s public policy. Id. See also New Madrid County Reorganized School District No. 1 v. Continental Cas. Co., 904 F.2d 1236 (8th Cir. 1990) (holding that a policy explicitly insuring “wrongful acts” was enforceable). Courts have denied coverage for punitive damages where the policies were only intended to cover compensation for bodily injury. See DeShong v. Mid-States Adjustment, Inc., 876 S.W.2d 5 (Mo. Ct. App. 1994); Schnuck Markets, Inc. v. Transamerica Ins. Co., 652 S.W.2d 206 (Mo. Ct. App. 1983); Crull v. Gleb, 382 S.W.2d 17 (Mo. Ct. App. 1964); Union L.P. Gas Sys., Inc. v. Int’l Surplus Lines Ins. Co., 869 F.2d 1109 (8th Cir. 1989).

Assuming the policy clearly provides coverage, vicariously assessed punitive damages would likely be insurable in Missouri because directly assessed punitive damages are insurable. In 1934, an Eighth Circuit opinion found that “no public policy is violated by protecting [the master] from the unauthorized and unnatural act of his servant.” Ohio Cas. Ins. Co. v. Welfare Finance Co., 75 F.2d 58 (8th Cir. 1934), cert. denied, 295 U.S. 734 (1935). It should be noted, however, that two appellate court cases have suggested that the question of whether vicariously assessed punitive damages are insurable remains open: DeShong, 876 S.W.2d 5;Schnuck Markets, Inc., 652 S.W.2d 206.

MONTANA
Directly assessed punitive damages are insurable in Montana in certain circumstances. See First Bank (N.A.)-Billings v. Transamerica Ins. Co., 679 P.2d 1217 (Mont. 1984); Fitzgerald v. Western Fire Ins. Co., 679 P.2d 790 (Mont. 1984) (finding that punitive damages for negligently driving an auto and causing injuries are insurable). However, in Smith v. State Farm Ins. Co., 870 P.2d 74 (Mont. 1994), the court held that public policy prohibits indemnifying willful misconduct.See also Mont. Code Ann. § 33-15-317 (2003) (insurance does not cover punitive damages unless expressly included in the contract).

Vicariously assessed punitive damages based upon non-intentional conduct would likely be insurable in Montana because directly assessed punitive damages based on non-intentional conduct damages are insurable.

NEBRASKA
The insurability issue in Nebraska is moot because Nebraska does not recognize punitive damages. Miller v. Kingsley, 230 N.W.2d 472 (Neb. 1975).

NEVADA
Directly assessed punitive damages are insurable in Nevada. “An insurer may insure against legal liability for exemplary or punitive damages that do not arise from a wrongful act of the insured committed with the intent to cause injury to another.” Nev. Rev. Stat. § 681A.095 (2003) (originally enacted in 1995). However, inSiggelkow v. Phoenix Ins. Co., 846 P.2d 303 (Nev. 1993), the Nevada Supreme Court held that under the terms of an uninsured motorist policy only compensatory damages were covered and, therefore, public policy prevented an insured from collecting punitive damages. Since Siggelkow pre-dates the statute, whether it remains valid precedent is open to argument.

Vicariously assessed punitive damages would likely be insurable in Nevada because directly assessed punitive damages are insurable.

NEW HAMPSHIRE
Directly assessed punitive damages are insurable in New Hampshire. New Hampshire allows the award of “liberal compensatory damages” in cases involving aggravating circumstances to compensate the plaintiff for the defendant’s conduct, but not for the purpose of punishing the defendant. Aubert v. Aubert, 529 A.2d 909 (N.H. 1987). Thus, there should be no public policy prohibition against insurance coverage for punitive damages in New Hampshire. While not expressly adopting this view, the court in American Home Assurance Co. v. Fish, 451 A.2d 358 (N.H. 1982), held that there was no public policy prohibition against insurance coverage for punitive damages awarded against city officials arising out of intentional torts such as false arrest or slander. See also Weeks v. St. Paul Fire & Marine Ins. Co., 673 A.2d 772 (N.H. 1996).

Vicariously assessed punitive damages would likely be insurable in New Hampshire because directly assessed punitive damages are insurable in New Hampshire.

NEW JERSEY
Directly assessed punitive damages are not insurable in New Jersey. See Johnson & Johnson v. Aetna Cas. and Sur. Co., 667 A.2d 1087 (N.J. Super. Ct. App. Div. 1995); Variety Farms, Inc. v. New Jersey Manufacturers Ins. Co., 410 A.2d 696 (N.J. Super. Ct. App. Div. 1980); LoRocco v. New Jersey Manufacturers Indem. Ins. Co., 197 A.2d 591 (N.J. Super. Ct. App. Div. 1964), cert. denied, 199 A.2d 655 (N.J. 1964).

Vicariously assessed punitive damages, however, are likely insurable in New Jersey. In Malanga v. Manufacturers Cas. Ins. Co., 146 A.2d 105 (N.J. 1958), a jury returned a verdict for compensatory and punitive damages against a partnership and an individual partner, Malanga. Coverage for punitive damages was held to be available to the partnership for acts committed by Malanga as long as the acts were not authorized by the partnership. Although only in dicta, a New Jersey appellate court decision questioned whether the Malanga case authorizes insurance coverage for vicariously assessed punitive damages. In Johnson & Johnson, the court interpreted Malanga’s holding as applying principles of partnership law, not as settling the question of vicarious liability coverage. Specifically, the court was concerned that by allowing insurability in product liability cases, more defective products would reach the marketplace.

NEW MEXICO
Directly assessed punitive damages are insurable in New Mexico. See Baker v. Armstrong, 744 P.2d 170 (N.M. 1987); Stinbrink v. Farmers Ins. Co. of Arizona, 803 P.2d 664 (N.M. 1990).

Vicariously assessed punitive damages would likely be insurable in New Mexico because directly assessed punitive damages are insurable.

NEW YORK
Directly assessed punitive damages are not insurable in New York. See Public Service Mut. Ins. Co. v. Goldfarb, 425 N.E.2d 810 (N.Y. 1981); Hartford Accident & Indem. Co. v. Village of Hempstead, 397 N.E.2d 737 (N.Y. 1979); Soto v. State Farm Ins. Co., 600 N.Y.S.2d 407 (N.Y. App. Div. 1993), aff’d 635 N.E.2d 1222 (N.Y. 1994); National Union Fire Ins. Co. of Pittsburgh, Pa. v. Ambassador Group, Inc., 556 N.Y.S.2d 549 (N.Y. App. Div. 1990), appeal dismissed, 571 N.E.2d 85 (N.Y. 1991). In addition, the court in Home Ins. Co. v. American Home Products Corp., 550 N.E.2d 930 (N.Y. 1990), aff’d in part, rev’d in part, 902 F.2d 1111 (2d Cir. 1990), applied the prohibition to out-of-state punitive damages awards for which the insured seeks coverage in New York. The court pointed out that “the punitive nature of the award, coupled with the fact that a New York insured seeks to enforce it in New York against a New York insurer … calls for the application of New York public policy.” 550 N.E.2d at 933. See Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 642 N.E.2d 1065 (N.Y. 1994) (noting that only when a statute allowing indemnification awards damages that serve a wholly punitive, and not compensatory, purpose are they precluded by New York policy).

Vicariously assessed punitive damages are not insurable in New York. See Zurich Ins. Co., 642 N.E.2d 1065.

NORTH CAROLINA
Directly assessed punitive damages are insurable in certain circumstances in North Carolina. In Mazza v. Medical Mut. Ins. Co., 319 S.E.2d 217 (N.C. 1984), the court held that punitive damages arising from wanton or grossly negligent conduct are insurable. However, the court declined to decide whether punitive damages arising from intentional conduct would also be insurable. Id. The court in New South Ins. Co. v. Kidd, 443 S.E.2d 85 (N.C. Ct. App. 1994), noted the distinction when it held that an insurance policy excluding coverage for intentional acts is interpreted to cover punitive damage awards arising from willful and wanton conduct.

Vicariously assessed punitive damages are insurable in North Carolina. Boyd v. Nationwide Mut. Ins. Co., 424 S.E.2d 168 (N.C. Ct. App. 1993). See also N.C. Gen. Stat. Ann. § 1D-15 (West 2004) (punitive damages shall not be awarded against a person solely on the basis of vicarious liability, and may be awarded against a person only if that person participated in the conduct constituting the aggravating factor giving rise to the punitive damages or if a corporation’s officer participated in or condoned the conduct).

NORTH DAKOTA
Directly assessed punitive damages arising out of intentional conduct are not insurable in North Dakota. Nodak Mut. Ins. Co. v. Heim, 559 N.W.2d 846 (N.D. 1997); Hins v. Heer, 259 N.W.2d 38 (N.D. 1977). Statutory law prohibits contracts that would shift responsibility for willful acts away from the wrongdoer. Section 9-08-02 of the North Dakota Code provides that “[a]ll contracts which have for their object, directly or indirectly, the exempting of anyone from responsibility for his own fraud or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” However, the Supreme Court of North Dakota has also ruled that where a policy endorsement waived an exclusion for punitive damages, the insurer was obligated to pay a punitive damages award. Continental Cas. Co. v. Kinsey, 499 N.W.2d 574 (N.D. 1993). The insurer may then seek indemnity from the insured if the insured’s punitive damages are assessed based on an insured’s fraud or deceit. Id. The insurability of punitive damages based upon non-intentional conduct has not yet been litigated in North Dakota but, based on Kinsey, it appears that punitive damages based on non-intentional conduct are insurable.

While there is no case on point, vicariously assessed punitive damages would likely be insurable in North Dakota because directly assessed punitive damages are insurable.

OHIO
Insurance for directly assessed punitive damages is disfavored in Ohio. State Farm Mut. Ins. Co. v. Blevins, 551 N.E.2d 955 (Ohio 1990) (purpose of punitive damages would be frustrated by permitting insurance to indemnify the wrongdoer); Wedge Products, Inc. v. Hartford Equity Sales, 509 N.E.2d 74 (Ohio 1987) (public policy is contrary to insurance against intentional torts). National Union Fire Ins. Co. of Pittsburgh, Pa. v. Shane & Shane Co., 605 N.E.2d 1325 (Ohio Ct. App. 1992); see also Casey v. Calhoun, 531 N.E.2d 1348 (Ohio Ct. App. 1987) (it is against public policy to obtain insurance coverage for punitive damages awarded in a defamation action). However, the Ohio Supreme Court stated that insurance against punitive damages will be allowed where the contract is specific as to the undertaking such an obligation. Blevins, 551 N.E.2d at 959.

While there is no case on point, vicariously assessed punitive damages would likely be insurable in Ohio because directly assessed punitive damages are insurable.

OKLAHOMA
Directly assessed punitive damages are not insurable in Oklahoma. See Magnum Foods, Inc. v. Continental Cas. Co., 36 F.3d 1491 (10th Cir. 1994); Aetna Cas. & Surety Co. v. Craig, 771 P.2d 212 (Okla. 1989); Dayton Hudson Corp. v. American Mut. Liability Ins. Co., 621 P.2d 1155 (Okla. 1980).

Vicariously assessed punitive damages, however, are insurable in Oklahoma. Dayton Hudson Corp., 621 P.2d 1155.

OREGON
Directly assessed punitive damages are insurable in Oregon. In Harrell v. Travelers Indem. Co., 567 P.2d 1013 (Or. 1977), the court held that insurance coverage for punitive damages awarded on the basis of grossly negligent or reckless conduct is permissible. However, insurance coverage for damages arising out of “intentional conduct in inflicting injury upon another” is unenforceable as against public policy. See, e.g., Snyder v. Nelson, 564 P.2d 681 (Or. 1977); Isenhart v. Cas. Co. of America, 377 P.2d 26 (Or. 1962). See alsoGroshong v. Mutual Of Enumclaw Ins. Co., 923 P.2d 1280 (Or. Ct. App. 1996), aff’d,. 985 P.2d 1284 (Or. 1999) (holding that public policy precludes insurance coverage for discrimination because such action is intentional).

Vicariously assessed punitive damages, including those arising out of grossly negligent or reckless conduct are insurable in Oregon because directly assessed punitive damages based upon such conduct are insurable. See Harrell, 567 P.2d at 1020.

PENNSYLVANIA
Directly assessed punitive damages are not insurable in Pennsylvania. See Butterfield v. Giuntoli, 670 A.2d 646 (Pa. Super. Ct. 1995), appeal denied., 683 A.2d 875 (Pa. 1996); Martin v. Johns-Manville Corp., 494 A.2d 1088 (Pa. 1985), reversed on other grounds, 528 A.2d 947 (Pa. 1987); Esmond v. Liscio, 224 A.2d 793 (Pa. Super. Ct. 1966).

Vicariously assessed punitive damages, however, are insurable in Pennsylvania. See also Pennbank v. St. Paul Fire & Marine Ins. Co., 669 F. Supp. 122 (W.D. Pa. 1987), see also Butterfield, 670 A.2d 646.

RHODE ISLAND
Directly assessed punitive damages are not insurable in Rhode Island. Allen v. Simmons, 533 A.2d 541 (R.I. 1987) (holding that statutory law does not require insurer to indemnify for punitive damages in situations involving uninsured motorists).

Whether vicariously assessed punitive damages are insurable in Rhode Island is undecided.

SOUTH CAROLINA
Directly assessed punitive damages are insurable in South Carolina. See Carroway v. Johnson, 139 S.E.2d 908 (S.C. 1965) (holding that insurer was required to pay punitive damages under terms of auto insurance policy). An opinion of the South Carolina Attorney General dated March 22, 1983 advised that a general liability policy would provide coverage for punitive damages, but only if neither intentional nor criminal conduct was involved. However, in South Carolina State Budget & Control Board v. Prince, 403 S.E.2d 643 (S.C. 1991), the South Carolina Supreme Court discounted the Attorney General’s suggestion that only non-intentional conduct may be covered. The court stated that an insurer issuing a policy that implies coverage for damages based on intentional acts will not be able to deny coverage later in the name of public policy. Id.

Vicariously assessed punitive damages are also insurable in South Carolina. See Glens Falls Indem. Co. v. Atlantic Building Corp., 199 F.2d 60 (4th Cir. 1952),see also South Carolina State Budget & Control Board, 403 S.E.2d 643.

SOUTH DAKOTA
South Dakota has not clearly decided whether directly assessed punitive damages are insurable. In City of Ft. Pierre v. United Fire and Cas. Co., 463 N.W.2d 845 (S.D. 1990), the South Dakota Supreme Court stated that “[w]ere a person able to insure himself against [the] economic consequences of his intentional wrongdoing, the deterrence attributable to financial responsibility would be missing.” However, in Dairyland Ins. Co. v. Wyant, 474 N.W.2d 514 (S.D. 1991), the same court stated that the language in Ft. Pierre could be considered dicta and that the “application of this principle of public policy to insurance contracts purporting to extend coverage for punitive damages is best left for a case where the question is squarely presented.” Id. at 516. A strenuous dissenter in Dairylandargued that the language of Ft. Pierre was not dicta but rather the “settled law” in South Dakota.

The insurability of vicariously assessed punitive damages in South Dakota has not been decided.

TENNESSEE
Directly assessed punitive damages are insurable in Tennessee. See Lazenby v. Universal Underwriters Ins. Co., 383 S.W.2d 1 (Tenn. 1964). The court construed the policy language at issue as providing coverage for punitive damages, but the court noted that coverage would be unavailable for punitive damages arising from intentional conduct. Id. The Tennessee Supreme Court has also held that in the absence of a provision to the contrary, an insurer must satisfy a compensatory damage award, to the extent of its limits, before paying any part of a punitive damage award. West v. Pratt, 871 S.W.2d 477 (Tenn. 1994).

Vicariously assessed punitive damages based upon non-intentional conduct also would likely be insurable in Tennessee because directly assessed punitive damages based upon such conduct are insurable.

TEXAS (revised March 25, 2005)
The Texas Supreme Court has not yet ruled on whether directly assessed punitive damages are insurable, however, the appellate courts have gone both ways in their rulings. Some appellate courts have held that punitive damages are uninsurable as void against public policy. See Milligan v. State Farm Mut. Auto Ins. Co., 940 S.W.2d 228 (Tex. Ct. App. 1997); State Farm Mut. Auto. Ins. Co. v. Shaffer, 888 S.W.2d 146 (Tex. Ct. App. 1994); Vanderlinden v. United Services Auto Ass’n Prop. and Cas. Ins. Co., 885 S.W.2d 239 (Tex. Ct. App. 1994). However, other courts of appeal have ruled that directly assessed punitive damages are insurable in Texas. See Dairyland County Mut. Ins. Co. v. Wallgren, 477 S.W.2d 341 (Tex. Ct. App. 1972); Ridgway v. Gulf Life Ins. Co., 578 F.2d 1026 (5th Cir. 1978). See also Hartford Cas. Ins. Co. v. Powell, 19 F. Supp. 2d 678 (N.D. Tex. 1998) (federal court predicting that the Texas Supreme Court would find punitive damages uninsurable). The Insurability of Punitive Damages is cited in Westchester Fire Ins. Co. v. Admiral Ins. Co., 152 S.W.3d 172 (Tex. Ct. App. 2004), which surveys the important cases and concludes that punitive damages are insurable for claims arising before September 1, 1995. Since that date the purpose of punitive damages has been punishment only, rather than punishment and example both, and the court declined to address whether they remain insurable.

Vicariously assessed punitive damages are insurable in Texas. See American Home Assurance Co. v. Safway Steel Products Co., 743 S.W.2d 693 (Tex. Ct. App. 1987).

UTAH
Neither directly assessed nor vicariously assessed punitive damages are insurable in Utah because § 31A-20-101 of the Utah Code prohibits an insurer from insuring against punitive damages.

VERMONT
Directly assessed punitive damages are insurable in Vermont. See American Protection Ins. Co. v. McMahan, 562 A.2d 462 (Vt. 1989); State v. Glens Falls Ins. Co., 404 A.2d 101 (Vt. 1979).

While there is no case on point, vicariously assessed punitive damages would likely be insurable in Vermont because directly assessed punitive damages are insurable.

VIRGINIA
Directly assessed punitive damages are insurable in Virginia. Lipscombe v. Security Ins. Co. of Hartford, 189 S.E.2d 320 (Va. 1972). Section 38.2-227 of the Virginia Code allows insurance coverage for punitive damages “arising out of the death or injury of any person as the result of negligence, including willful and wanton negligence, but excluding intentional acts.” This statute was construed in U.S. Fire Ins. Co. v. Aspen Building Corp., 367 S.E.2d 478 (Va. 1988), however, as not extending to property damage cases. See also United Services Auto Ass’n v. Webb, 369 S.E.2d 196 (Va. 1988).

Whether vicariously assessed punitive damages are insurable in Virginia is moot because Virginia does not allow the vicarious imposition of punitive damages.Dalton v. Johnson, 129 S.E.2d 647 (Va. 1963); Hogg v. Plant, 133 S.E. 759 (Va. 1926).

WASHINGTON
Punitive damages are not allowed in Washington unless expressly authorized by statute. Fisher Properties, Inc. v. Arden-Mayfair, Inc., 726 P.2d 8 (Wash. 1986);Barr v. Interbay Citizens Bank of Tampa, 635 P.2d 441 (Wash. 1981), amended, 649 P.2d 827 (Wash. 1982). However, in cases where punitive damages are authorized by statute, insurance coverage of punitive damages does not violate public policy. Fluke Corp. v. Hartford Acc. & Indem. Co., 34 P.3d 809 (Wash. 2001).

Although there is no case on point, where a statute authorizes the award of punitive damages, vicariously assessed punitive damages are likely insurable because directly assessed punitive damages are insurable.

WEST VIRGINIA
Directly assessed punitive damages are insurable in West Virginia. See Hensley v. Erie Ins. Co., 283 S.E.2d 227 (W. Va. 1981) (holding that the public policy of West Virginia does not prohibit insurance coverage for punitive damages arising out of gross, reckless or wanton negligence).

Vicariously assessed punitive damages based upon gross, reckless or wanton negligence would likely be insurable in West Virginia because directly assessed punitive damages based upon such conduct are insurable.

WISCONSIN
Directly assessed punitive damages are insurable in Wisconsin, but the remedy of punitive damages is only available when the defendant acts in wanton, willful or reckless disregard of the plaintiff’s rights or interests. See Brown v. Maxey, 369 N.W.2d 677 (Wis. 1985); Koehring Co. v. American Mut. Liability Ins. Co., 564 F. Supp. 303 (E.D. Wis. 1983).

Vicariously assessed punitive damages arising out of wanton, willful or reckless conduct would likely be insurable in Wisconsin because directly assessed punitive damages based upon such conduct are insurable.

WYOMING
Directly assessed punitive damages are insurable in Wyoming. See Sinclair Oil Corp. v. Columbia Cas. Co., 682 P.2d 975 (Wyo. 1984) (holding that insurance coverage for punitive damages arising out of willful or wanton conduct is available in Wyoming).

Vicariously assessed punitive damages are also insurable in Wyoming. Id.