Insurer Refuses $10M Punitive Damages Coverage Claim Over Virginia ‘Intentional Acts’ Law

Twin City Fire Insurance Co. is challenging a $10 million punitive damages claim against the Society for Human Resource Management (SHRM), arguing that Virginia law bars coverage for intentional acts. The insurer is seeking a judicial declaration that it is not obligated to indemnify SHRM under its employment practices liability (EPL) insurance policy.

The dispute centers on SHRM’s attempt to trigger coverage for a substantial penalty imposed for racial bias. Twin City maintains that the jury’s finding of intentional behavior places the claim outside the scope of protection under Virginia’s “intentional acts” law. This legal doctrine typically excludes coverage for damages resulting from deliberate wrongdoing, creating a significant barrier for policyholders seeking insurance protection in such cases.

Employment practices liability insurance is designed to protect businesses against claims related to workplace misconduct, including discrimination, harassment, and wrongful termination. However, the distinction between negligent and intentional acts remains a critical factor in coverage determinations, with punitive damages often falling into a gray area that insurers vigorously contest.

Key takeaways

  • Twin City Fire Insurance is refusing to cover a $10 million punitive damages claim against SHRM
  • The insurer cites Virginia’s “intentional acts” law as the basis for denial
  • SHRM is attempting to activate its employment practices liability insurance policy
  • The case highlights the complex interplay between punitive damages and insurance coverage

What this means for policyholders

This case underscores the importance of understanding policy exclusions related to intentional acts and punitive damages, particularly for EPL coverage. Policyholders should carefully review their policies to identify potential coverage gaps and consider additional endorsements if needed.

Source: Insurer Says Virginia ‘Intentional’ Acts Law Blocks $10M Punitive Damages Claim. This article was rewritten by InsurAdvice from the original reporting.