Permits a liability policy to provide coverage for punitive damages, civil penalties and other non-compensatory damages.

This bill allows liability insurance policies to cover punitive damages, civil penalties, and other types of damages that do not directly compensate for losses. This means that if someone is sued and found liable for more than just compensatory damages, their insurance could help pay those additional costs. This could change how liability insurance is structured and what it covers.

Supporters of this bill argue that it provides essential protection for policyholders, ensuring they are not financially devastated by punitive damages that can arise from lawsuits. They believe this will encourage responsible behavior by allowing individuals and businesses to secure comprehensive coverage without fear of excessive financial penalties.

Critics of the bill contend that allowing insurance to cover punitive damages could lead to irresponsible behavior, as individuals and businesses might take greater risks knowing they have financial protection. They worry this could undermine the deterrent effect of punitive damages, which are meant to punish wrongdoing and prevent future misconduct.