Until 2008, Texas law excluded punitive damages from insurance coverage as a matter of public policy. Northwestern National Cas. Co. v. McNulty, 307 F.2d 432 (5th Cir. 1962). In 2008, the Texas Supreme Court enunciated a two-step process requiring a review of the plain language of the policy and a public policy analysis to determine if the policy provided coverage. Fairfield Insurance Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 655 (Tex. 2008).
Since 2008, the legal community has subscribed to the logic that absent policy language excluding punitive damages, punitive damages are covered under the liability coverage of a personal and/or commercial auto policy. However, two recent decisions out of San Antonio moved punitive damages back into the spotlight.
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