Check the Wording Carefully

Courts in many jurisdictions have interpreted the “intentional act” exclusion in a Homeowners policy form to mean that the injury itself had to have been intended by the insured. But not all policies read the same as to that exclusion. Knowing that it is never safe to make assumptions is especially true in coverage analysis.

This was the case in a Michigan claim where the Homeowners form included “criminal acts” in the intentional acts exclusion. During a basketball game at a YMCA, the named insureds’ 13-year-old son threw another player to the floor, causing head and hip injuries. The insureds’ son was accused of aggravated assault, and pled nolo contendere in Juvenile Court. When the insureds sought coverage for the injury claim, the insurer denied on the basis that the act was “criminal” in nature and thus excluded. Both the trial and appellate courts upheld the insurer’s denial.

A “criminal acts” exclusion in an excess auto liability coverage was also upheld by the Supreme Court of Colorado in a case involving use of a rental vehicle. The renter was high on methamphetamines and collided with another auto, injuring its driver and killing her infant. The police chased the renter for more than 12 minutes at speeds up to 100 mph until the renter was forced off the road and arrested. The injured plaintiff sought coverage under the rental company’s excess auto liability policy, which denied coverage on the basis of the “criminal acts” exclusion in the rental agreement. The courts agreed with the insurer that the coverage was not issued deceptively.

In a similar but unrelated Kansas decision, the Eighth Circuit upheld the federal district court’s finding that “fraud” was not a covered “occurrence” under a personal umbrella policy, as it was not an “accident.” The case involved the sale of a home in which the purchasers alleged that the sellers had fraudulently misrepresented the physical condition of the home and had thus breached the contract. Their lawsuit did not seek property damage, only economic damage. The insurer denied on the basis that the claim was not a covered occurrence and that economic damages were not covered.

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