Most Favored Venue for Punitive Damages

For states that do not allow for the insuring of punitive damages, there is a coverage provision for professional liability policies that may assist.  Typically referred to as a most favored or favorable venue for punitive damages, the clause allows for the law of the jurisdiction that is most favorable to the insurability of exemplary, punitive or multiplied damages to apply if there’s a dispute over insurability of such damages.  Examples of parameters around available jurisdictions include where damages were awarded, location of act that gave rise to the damages, named insured’s place of business and insurer’s place of business.  The charge for this coverage will vary as sometimes it is built into the base form while other times, it is only available via endorsement.  While this provision may be beneficial, there appears to be no interpretation by the courts of this coverage language.  So, its benefit appears unproven according to our research.   But that doesn’t necessarily mean it has no impact.  We did find at least one case where the court determined that the use of the most favored venue language plus other jurisdiction language included via State Amendatory in the policy (and a lack of a general Choice of Law policy provision), meant that different jurisdictions were intended to apply to different portions of the policy.  So, the Court decided to use its own judgment in choosing which jurisdiction would apply to the case.  For more about jurisdictions, see our previous entry re choice of law and choice of venue.