Do insurance companies typically pay for punitive damages?

Insurance companies generally do not pay for punitive damages because these damages are intended to punish the wrongdoer and deter similar conduct in the future, rather than to compensate the victim for a loss. Most insurance policies are designed to cover claims for compensatory damages resulting from negligence or accidental harm, which are aimed at restoring the plaintiff to their previous position financially.

Since punitive damages are tied to a party's intentional misconduct or gross negligence, they fall outside the typical coverage parameters within standard liability insurance. In many cases, policy language explicitly excludes coverage for punitive damages, reinforcing the idea that the insurance mechanism is not meant to cushion the consequences of especially egregious behavior.

While there can be unique circumstances or specific types of policies that may allow for coverage of punitive damages, such instances are rare and not the norm in general practice. Thus, the assessment that insurance companies never cover punitive damages aligns with the standard interpretations of insurance policies in providing financial restitution rather than punishment.