HEARD ON THE BEAT / BUZZ FROM THE BUSINESS WORLD
Damages Assessment: Punitive damages have become a hot topic among tax, insurance and legal professionals as the California Supreme Court debates whether insurance companies have to pay such damages and President Clinton proposes that they no longer be tax-deductible for companies.
Traditionally, insurers must pay for an insured company’s defense but are not required to pay for punitive damages levied against their customers. In PPG Industries vs. Transamerica Insurance Co., however, the insured company’s lawyers are arguing that Transamerica’s refusal to settle an accident case resulted in a $6.1-million award, including $1 million in punitive damages. The court’s decision is expected within three months.
Pressure to settle cases in order to avoid punitive damage awards may increase if Clinton is successful in his drive to eliminate the current tax deduction, lawyers and tax experts say.
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