Exemplary damages are financial payments that must be paid after the loss of a civil suit. Many insurance policies have exclusions for exemplary damages, meaning they will not pay these financial obligations if a policyholder is sued.
Liability insurance can cover some of the insured's court costs. Particular liability policies, however, may exclude exemplary damages, leaving the insured to shoulder the full weight of these expenses.
Many businesses look for commercial general liability policies that include coverage for exemplary damages in order to mitigate these financial risks.
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