News & Events

News & Events

3.24.2008

Oregon Supreme Court Limits Punitive Damage Awards for Insurer Bad Faith

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On 6 March 2008, the Oregon Supreme Court rendered its decision in Goddard v. Farmers Ins. Co. of Oregon, holding that any punitive damage award for an insurer’s bad faith failure to settle a third-party claim within policy limits must ordinarily be limited to four times the amount of compensatory damages. Under the “due process” clause of the United States Constitution, “excessive” punitive damages are prohibited. However, courts have generally held that the determination of “excessiveness” is case-specific and hinges on several non-quantifiable factors. The Goddard case, therefore, represents a potentially significant step towards greater predictability for insurers’ punitive damages exposure. View full article (PDF).