Punitive damages in civil law are damages intended to punish one of the parties to a proceeding due to misbehavior. Such damages are awarded very rarely since punishment is usually one of the objectives of the criminal law not the civil law.
Behavior that warrants an award of punitive damages in a civil matter has to be pretty bad and often involve a significant power imbalance between the parties – like the relationship between an insurer and an insured.
Sometimes an insurance company will get locked into an unreasonable position. It’s like the tunnel vision prosecutors and police get in wrongful conviction cases. Or maybe they just get too aggressive. Without an insurer admitting it’s hard to know.
Recently it was the insurance company Aviva that got dinged for a special award at the Tribunal level. A special award is ordered by the arbitrator at the Tribunal hearing when the arbitrator concludes that the insurer has been unreasonable in denying benefits. It’s technically not punitive damages but it’s similar. In this case Aviva denied significant accident benefits to it’s own insured even though it’s own insured was very seriously injured and needed care twenty four hours each day every day.
Just before the hearing was about to start Aviva agreed to pay one hundred percent of the amount claimed. But by then it was too late. The claimant successfully pursued a special award. Aviva argued that it wasn’t being unreasonable. They argued that they changed their mind after receiving legal advice. And this makes absolutely no sense to me. In such a case shouldn’t an insurer get legal advice before denying a claim for benefits? Instead they put their own client through hell, force them to go to a hearing, and on the doorstep, just before the hearing starts, they change their mind?