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extracontractual damages

Damages that are in addition to or outside of a contract of insurance. Extracontractual damages are awarded in "bad faith" claims against insurance companies. They are a form of punitive damages, intended to punish extreme insurer conduct. Extracontractual damage awards most frequently arise from unfair claims handling practices (e.g., unjust denial of coverage, failure to settle a claim within policy limits). See also Bad faith.


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