Texas Supreme Court Holds That Punitive Damages Against Employer Are Insurable

On February 15, the Texas Supreme Court issued an opinion deciding the following certified question from the Fifth Circuit: “Does Texas public policy prohibit a liability insurance provider from indemnifying an award for punitive damages imposed on its insured because of gross negligence?” The court answered that question in the negative. That puts Texas law at odds with California law, which provides that punitive damages are not insurable.