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What Are Punitive Damages, and Why Do They Matter?

 

A judge’s gavel rests on a stack of hundred-dollar bills in front of a folded U.S. flag. The overlaid text reads: “What are Punitive Damages? M 3795 can limit both payouts and legal defense.” Bottom right includes the Truck U logo.

The M 3795 Amendment: What Every Trucker Needs to Know About Punitive Damage Exclusions

Let’s talk about something that keeps popping up in trucking insurance. If you see “M 3795 (03/1987) Punitive Damage Exclusion Duty to Defend Amendment” in your paperwork, you are not alone. This add-on is showing up more and more, and drivers are noticing.

We get calls about it every week. Here’s what it means, in layman’s terms.

What Are Punitive Damages, and Why Do They Matter?

Most lawsuits in trucking are about compensatory damages. That means paying for real losses: repairs, medical bills, lost wages, and so on.

But sometimes, lawyers go after punitive damages.
Punitive damages are not about paying someone back. They are about punishment. If a court thinks your company or driver acted reckless or ignored safety, they can tack on extra money just to send a message. That number can get huge, fast.

Punitive damages are the reason you see those big, scary verdicts in the headlines. Even if your regular insurance covers the basics, punitive damages can blow up your business overnight if you are not ready.

Why Do Courts Hit Truckers With Punitive Damages?

It’s not just about the crash. Punitive damage usually means a court wants to make an example out of someone.


Here’s when that might happen:

  • The driver was drunk or high.
  • Someone skipped safety steps or lied on paperwork.
  • The company knew a truck was unsafe and sent it out anyway.
  • Training was half-done or ignored.
  • Dispatch pushed a driver past legal hours.
  • The company tried to hide what happened after an accident.

It’s all about intent. If a judge or jury thinks you did something on purpose or kept making the same bad call, that’s when punitive damages show up.

It’s not every case, but when it happens, it’s a big deal.

What Is the M 3795 Amendment?

This amendment is a special rule your insurance company adds to your policy. It says:

  • Your policy does not pay for any punitive or “extra” damages a jury might award.
  • If someone sues you and only asks for punitive damages, your insurance company does not have to help pay for your lawyer.
  • If a lawsuit has both regular claims (like injuries or damage) and punitive claims, your insurance will pay for the defense on the covered stuff only. You are on your own for the rest.
  • If the regular claims get dropped and only punitive damages are left, your insurance stops defending you.

Why Are Carriers Using This Now?

Lawsuits against trucking companies keep getting bigger. More lawyers ask for massive punitive damages in every case. Insurance companies are trying to protect themselves from verdicts that can wipe out a whole policy with one ruling.

Where Are These Exclusions Showing Up?

You’ll find this amendment on lots of trucking policies right now. It doesn’t matter if you run one truck or a whole fleet.

Some states say insurance companies must include this exclusion. Other states let the insurance carrier decide. That means your policy might have this rule because the law says so, or just because the carrier wants it.

How Does This Actually Affect You?

  • If a jury finds you have to pay punitive damages, you pay that bill yourself.
  • You might need to hire your own lawyer for part of a case, even if your policy pays for the rest.
  • If the only thing left in the lawsuit is a claim for punishment, your insurer steps back and you are on your own.
  • Your premium may not go down. This change is not about saving you money. It’s about limiting risk.

Questions to Ask Before You Sign

  • If I get sued, who pays for my defense and for which claims?
  • What happens if a lawsuit is only about punitive damages?
  • If regular claims get dropped and only punitive remain, do I lose my defense?
  • Can I buy extra coverage for this? Is it legal in my state?

Write down the answers. Get it in plain English.

A Quick Example

Let’s say your driver has a wreck. The lawsuit wants regular damages (injuries, repairs) and also asks for punitive damages. Your policy pays for the regular stuff and helps with your lawyer. But if the jury hits you with a punitive award, you have to pay it. If the regular claims disappear, your insurer will not pay your legal bills anymore.

Our Take

The M 3795 amendment is not a trick. It is just another way insurance is changing right now. You need to know what is covered and what is not. That is the only way to avoid a surprise when you need help most.

If you are not sure what your policy says, send it over. We will break it down for you. No nonsense, no lectures. Just the facts.

 

Natasha & Jessica
Truck U Blog | info@trucku.biz | 254-294-7798

Disclosure:
This post is for educational purposes only. It’s not legal advice, insurance advice, or a substitute for calling your agent. We’re good, but we’re not psychic. Policies vary, laws change, and courtrooms get weird. Don’t make decisions based solely on something you read on the internet, unless it’s from us, in writing, with your name on it.

All opinions are our own and do not represent the views of any carrier, employer, or underwriting department that occasionally wishes we were quieter on LinkedIn.

 

 

 

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