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A claim for punitive damages can have a tremendous impact on any case. Even when an insurer is providing a defense and would not be obligated to pay for any punitive damages, the mere presence of a punitive damages claim can dramatically alter the handling of the case by adding uncertainty to the process. This, in turn, makes it much more difficult to determine the value of the case to reach a settlement.

Actually, punitive damages awards are relatively rare, and most are relatively modest in size. According to a recent study by the U.S. Department of Justice, successful plaintiffs obtain punitive damages roughly three percent of the time, and the median award is $55,000. See Tort Bench and Jury Trials, 2005, U.S. Department of Justice, Bureau of Justice Statistics (Nov. 6, 1999).

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