Punitive Damage Exclusions and the Alabama Wrongful Death Act

Alabama's Wrongful Death Act (Ala. Code 6-5-410(1975)) only allows punitive damages and not compensatory damages. (See Merrell v. Alabama Power Co. 382 So. 2d 494 (1980)). Liability policies frequently exclude coverage for punitive damages. Many liability policies, and frequently automobile liability policies will contain an Alabama endorsement which creates an exception to the punitive damage exclusion which provides coverage for punitive damages when they are awarded under the Alabama Wrongful Death Act.  However, some do not.

There are no cases identified regarding homeowners' liability policies and the wrongful death exclusion.  The question is what would the Supreme Court do if asked whether the punitive damage exclusion for wrongful death (where punitive damages are the ONLY available damages) is against public policy and thus void.  This topic is addressed in Bibb Allen's Alabama Liability Insurance Handbook currently edited by CS Partner John Johnson. It is the consensus that the Alabama Supreme Court would likely hold a punitive damage exclusion invalid as it applies to wrongful death.

"Because of the oddity of the Alabama Wrongful Death Act, "[a] standard liability policy that excluded coverage for punitive damages in a wrongful death case would contravene Alabama law."  See also Alabama Attorney Gen. Op. 2 (Feb. 1, 1978) ("[A]ny administrative ruling which allowed insurance companies to exclude coverage for punitive damages under standard liability policies would be in direct contravention of wrongful death case law on the subject, and would therefore be void as against public policy of [the State of Alabama] as well.").

Wingard v. Lansforsakringar AB, 2014 U.S. Dist. LEXIS 131572. (Alabama Middle District, Sept. 30, 2013. It is this author's opinion that the Alabama Supreme Court would likely find any punitive damage exclusion in any policy as void against public policy when applied to damages from a judgment under the Alabama Wrongful Death Act.

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