Punitive Damages Explanation
Insurance contracts require that each party reposes an element of trust and confidence in the other to perform the terms and conditions of the contract. One party’s right to indemnity, standing alone, does not give rise to a fiduciary relationship. Therefore, it can be argued that in California, punitive damages may not be awarded for a breach of an insurance contract and the plaintiff must prove actual tortious conduct that complies with all of the requirements for proof of punitive damages. Applying the Exxon, case the punitive damages should never exceed, if they are awarded at all, more than a 1:1 ratio of compensatory damages.
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