Employers watch out!

New Punitive Damages for Vicarious Liability

This session the General Assembly passed a law modifying the Punitive 

Damages statute in Tennessee regarding Vicarious Liability. "Vicarious Liability" assigns responsibility for an injury to a person who did not cause the injury, but rather has a relationship with the person that did.

Generally speaking, the new law says that punitive damages may be awarded against an employer based upon the acts of an employee IF it is proven by clear and convincing evidence that:

1) the act was committed by a manager while in the scope of employment; 

2) the employer was reckless in hiring or training the employee and that recklessness caused the injury; or 

3) the employer authorized the act disregarding that there could be an injury.*

The new Public Chapter may be found at http://state.tn.us/sos/acts/108/pub/pc0224.pdf and is now in effect.

Regarding punitive damages, if punitive damages are not excluded, then they may be covered under the terms of the policy. On July 19, 2004 Commissioner Flowers reversed the Department's prior policy disallowing punitive damages exclusions. Following the 2004 Bulletin, 

many companies filed forms excluding punitive damages immediately, and those exclusions remain in place today.

* Visit http://state.tn.us/sos/acts/108/pub/pc0224.pdf for full text of the law.

...From the Insurors of Tennessee

Andrew Darlington CRM, CIC, CBIA, AAI

Veritas
Risk Management & Insurance Services

PO Box 4539
Johnson City, TN 37602
Phone- (423)292-4142

Click here to visit our website

Veritas Risk Management, Inc. offers proactive risk management services covering a wide variety of topics. Veritas Risk Management, Inc. does not engage in the practice of law, accounting, or tax consulting.  We encourage everyone to consult with his or her own professional advisor for details concerning his or her specific facts, situations, and circumstances.

Click here to sign up for the Mens Monthly Leadership Round Table