The purpose of punitive damages is to punish the party at fault (punitive), and to set an example to deter future wrongdoers (exemplary). They are usually awarded against defendants in cases of intentional or extremely reckless conduct, not just for simple negligence. Willful or intentional conduct that rises to the level of punitive damages, however, is normally considered uninsurable as a matter of public policy, so there is no third party coverage available to cover such awards. What about first party Uninsured Motorist Coverage? One would think that it should be possible for the innocent party to be able to to insure itself against just about anything. Let's look at this question more closely.
What is Uninsured Motorist Coverage?
As California does not require vehicle owners to have uninsured motorist coverage, many people are unaware of what it actually is. Uninsured motorist coverage is a separate insurance policy. California state requires vehicle owners to have 15/30/5 liability insurance at a minimum. 15/30/5 insurance will pay a driver or injured passenger:
- Up to $15,000 for injury or death per person
- Up to $30,000 for total bodily injury or death per accident; and
- Up to $5,000 for property damage to other vehicles.
The extra uninsured motorist policy protects the policyholder, certain family members, or other passengers when the other driver is at-fault for the car accident but doesn't have insurance to cover the injured person's lost wages, pain and suffering, or medical bills that resulted from the accident.
For instance, Driver A is rear-ended by Driver B and suffers severe physical injuries. If Driver B has no insurance, Driver A's additional uninsured motorist policy will cover their medical bills, lost wages, and pain and suffering that the accident caused.
What Uninsured Motorist Coverage is Not
Uninsured motorist coverage is different from underinsured motorist coverage, which pays a policyholder for any damages they suffer when the at-fault party has insurance but doesn't have enough insurance to cover all of the injuries. Additionally, most states do not allow underinsured motorist coverage to pay punitive damages for the same reason uninsured motorist coverage cannot.
Uninsured motorist insurance is also different from uninsured motorist property damage insurance, which pays the policyholder for damage the uninsured motor vehicle caused to the policyholder's vehicle. Some states even allow for it to pay for personal property damage caused by the accident.
Why Doesn't Uninsured Motorist Insurance Recover Punitive Damages?
Punitive damages are meant to punish the at-fault individual who caused the accident and to deter people from causing them. The reason most states, along with California, do not allow uninsured motorist insurance to recover punitive damages is that the policyholder who was not at fault for the accident is paying for the insurance, not the at-fault individual. Therefore, the public policy reasons for awarding punitive damages would not be present.
Some states do allow uninsured motorist insurance to cover punitive damages. They reason that it does not go against public policy. They believe punitive damages don't deter the unwanted behavior. Instead, they believe that society would end up incurring the costs of the accident because liability insurance would increase.
It should be noted that punitive damages are not the same as compensatory damages. Compensatory damages are meant to compensate individuals in a personal injury case for any losses incurred. In an accident or injury, compensatory damages are either economic or non-economic. Economic damages include such things as medical bills, lost wages, and property damages. Non-economic damages include things like pain and suffering.
What to Do if You Get into an Accident in California?
California law requires a driver to notify their insurance company as soon as possible after an accident, whether or not they were at fault for the accident. They also require them to file a form SR-1 California accident report with the DMV within ten days if they are involved in an accident, and the accident caused an injury to anyone or caused more than $1,000 in damages to the vehicle. If you do not notify the DMV, your driver's license could be suspended.
The reality is that if you are involved in an automobile accident, whether you are the one at fault or not, a skilled personal injury attorney can help you determine what your options are.