Definition - What does Punitive Damages mean?
Punitive damages refer to compensation awarded to a plaintiff in a civil lawsuit on top of the actual damages. It is intended to punish the defendant for their wrongdoing and deter the same and others from similar illegal behavior. For example, a drunk driver who causes an accident may have to pay the medical bills of the injured party as well as punitive damages for their egregious misconduct.
Punitive damages are also known as exemplary damages.
Insuranceopedia explains Punitive Damages
Many liability policies do not protect against punitive damages. They only cover typical losses, such as the plaintiff's medical bills. However, extra coverage is available. In addition, a more expensive liability or umbrella policy might cover punitive damages.