Exemplary Damages

What Does Exemplary Damages Mean?

Exemplary damages, also known as punitive damages, are financial payments required following the loss in a civil suit. Many insurance policies include exclusions for exemplary damages, meaning they will not cover these financial obligations if a policyholder is sued.

Insuranceopedia Explains Exemplary Damages

Liability insurance can cover certain court costs incurred by the insured. However, specific liability policies may exclude exemplary damages, leaving the insured responsible for these expenses.

To mitigate these financial risks, many businesses seek commercial general liability policies that include coverage for exemplary damages.