The Texas Supreme Court recently held a liability insurer may indemnify an award of punitive damages imposed because of an insured's gross negligence. Public policy, the court reasoned, favored freedom of contract. The court, however, limited this decision to the workers' compensation context.
Of note, the Texas court noted that Hawaii has statutorily adopted the same conclusion. See Haw. Rev. Stat. § 431:10-240 (2007) (“Coverage under any policy of insurance issued in this State shall not be construed to provide coverage for punitive or exemplary damages unless specifically included.”)
See Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653 (Tex. 2008).
