How are punitive damages treated in Connecticut?
In Connecticut, common-law punitive damages are viewed more as compensatory damages. When the court awards punitive damages for gross or extreme negligence, they are limited to payment of the plaintiff's litigation expenses. This results in full compensation to the plaintiff and, at the same time, curbs excessive jury awards. There also are two statutory provisions for awarding punitive damages. One is found in C.G.S.A. 52-240b, which applies to product liability actions, and the other is found in C.G.S.A. 14-295, which applies to auto accidents caused by someone's deliberate recklessness (for example, "road rage").
Whether insurance is permitted to indemnify a defendant who is assessed punitive damages depends upon whether the culpability is direct or vicarious. If the liability is vicarious, punitive damages are insurable. Defendants who are actively negligent are not insurable as a matter of public policy (see, for example, the Tedesco v. Maryland Casualty Co. decision). The courts also addressed this issue with regard to uninsured motorists coverage and decided that punitive damages were not recoverable (see Caufield v. Amica Mutual Insurance Co. and Bodner v. USAA).