Skip to Content

extracontractual damages

Extracontractual damages are damages that are in addition to or outside of a contract of insurance.

On This Page

Additional Information

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 or failure to settle a claim within policy limits).

Related Terms

Bad faith is the term describing blatantly unfair conduct that exceeds mere negligence by an...