(April, 2013)

INTRODUCTION

Commercial general liability coverage forms and policies and homeowners insurance policies exclude bodily injury or property damage expected or intended from the standpoint of the insured. Stated another way, there is no coverage for intentional torts. Lawyers frequently allege intentional torts when they construct and draft lawsuits, among other things.

Note: According to Black's Law Dictionary, a tort is a private or civil wrong or injury, other than breach of contract, for which the court will provide a remedy in the form of an action for damages. It is a violation of a duty imposed by general law or otherwise upon all persons who occupy the relation to each other involved in a given transaction.

Insurance companies usually deny coverage when all allegations in a lawsuit involve intentional torts. If the insured then successfully defends such a lawsuit using its own funds, it must be determined if the insurance company has any obligation to reimburse the insured for its legal expenses.

A recent approach is that the insured is considered not to have committed the alleged intentional tort or torts that formed the basis for excluding coverage in the first place when it wins in court. This leads to the question of whether or not it is realistic to expect the coverage form or policy to reimburse the insured for the legal expenses it incurred because of such a finding in a court proceeding.

INTENT OF THE EXCLUSION

Insurance companies have always intended to exclude coverage for injury or damage the insured either expects or intends to occur. This exclusion has had numerous changes and revisions over the years and its wording continues to evolve and change as courts interpret and reinterpret it.

It should be pointed out that simply winning such a lawsuit does not necessarily mean that the action that triggered it was unintentional and, as a result, subsequently covered.

If the insured prevails in a legal action where the insurance company declines to defend, one option is for the insured to consult with the company concerning partial or total reimbursement of the legal fees it incurs to provide its own defense. The situation occasionally arises where the insurance company decides to reverse its denial of coverage and authorize some settlement or payment of defense costs. However, this is not always the case.

The insured should consider consulting with its legal advisor concerning any denial of defense coverage before it begins any legal action. Getting proper and appropriate legal advice and direction at that time helps to determine the steps to include that could streamline the entire process. Another approach is to determine the insurance company's obligation for defense if the court rules in the insured's favor.

THE EXPECTED OR INTENDED INJURY EXCLUSION IN THE ISO CGL COVERAGE FORMS

a. Expected or Intended Injury

Coverage does not apply to bodily injury or property damage expected or intended from the standpoint of the insured. The exception states that it does not apply to bodily injury that results from using reasonable force to protect persons or property.

Despite the fact that this language clearly states that injury or damage the insured expects or intends is excluded, courts interpret it in very different ways.

From the insurance standpoint, this language and the legal decisions of courts that have jurisdiction and interpret the language are the factors that determine whether or not coverage applies. Some states interpret the exclusion and its language broadly and liberally. Others interpret it literally. Jurisdictions that take the more liberal approach take the degree of injury or damage inflicted into consideration and whether the results of the act were expected or intended, not simply whether the act itself was expected or intended.

Some states have enacted laws that provide exceptions to the exclusion. Some of these laws permit protection or coverage for the innocent insured that had no part in or knowledge of the expected or intended act. Others protect the innocent insured victim of domestic abuse if the expected or intended injury or damage resulted from an act of domestic abuse. As stated above, some states have found or imputed coverage in the CGL Coverage Forms where none was ever intended if the extent of the injury or damage was not as expected or intended.

CONCLUSION

Several changes to the exclusion’s wording are currently being reviewed or are under consideration. This includes clarifying the intent of the exclusion to exclude coverage for any intentional injury or damage by amending the language to definitively state that there is no coverage even if the results are not expected or intended. This exclusion is always a hot topic and insurance professionals should study and be familiar with recent court decisions in the states or jurisdictions where they are involved.

RELEVANT COURT CASES

Related Court Cases (Commercial General Liability):

Additional Wording to Assault and Battery Exclusion Does Not Make the Clause Ambiguous

Assault and Battery Exclusion Held to Preclude Coverage for Injury

Asset Seizure Deemed Intentional, Not Accidental, Resulting In No Coverage

Conversion of Customer's Fuel by Employees Held Intentional and Not a Covered "Occurrence"

Does Masseur's Sexual Impropriety Constitute "Bodily Injury"?

"Expected or Intended Injury" Exclusion Did Not Apply to Bar Patron's Injuries

Fraud Determined to be an Intentional Act and Thus Excluded

Intentional Damage Exclusion Barred Claims against Liability

"Intended" Actions Negate Policy Coverage

Intentional Assault Excluded Under CGL

Insured's Intended Damage Not Covered

Liquor Liability Policy Does Not Cover Assault

Loss Deemed As Intentional Tort Not Covered

Negligent Management Allegation Held Not Covered Because Assault and Battery Exclusion Applied

No Coverage for Discrimination

Proximate Cause of Emotional Distress Is Excluded

Shooting by Security Guard Is Assault And Battery; Therefore, No Coverage

Tavern's Policy Excludes Injury from Patrons' Fight

Was Assault On Employee "Expected"?

Related Court Cases (Homeowners):

Accidental Injury from Deliberate Act Covered

Assailant's Victim Challenges Policy Exclusion

Assault or Accident?

Coach Knight Demands HO Coverage for Shoving Aide

Court Debates "Intentional" Vs. "Negligent" Acts

Daycare Operator Claims Coverage for Molestation

Defamatory Statements Relieve Insurer from Coverage

Drowning Death’s Coverage Disputed

Emotional Distress Held Not to Be Bodily Injury, Thus No Duty to Defend Is Owed, Further, Act Committed was Deemed Intentional So Not Covered

Expected and Intended Injury Exclusion Applies In Shooting Death

Expected and Intended Injury Exclusion Applies To Emotional Distress from a Murder Plot

Expected and Intended Injury Exclusion Upheld In Case Of Intentional Fire to Astroturf

Gunshots Intended To Frighten Not Covered

HO Insured Fails to Cooperate

HO Insures Denies Claim for Intentional Injury

HO Policy Covers Shooting By Mentally Impaired Person

HO Policy Doesn't Cover Son's Intentional Act

HO Policy Excludes Physical Abuse of Minor

HO, Umbrella Policies Exclude Losses Involved In Selling Defective Home

Harm Is Inferred In Sexual Harassment

Horseplay Not Intentional Injury

"Illegal Act" Wording Ambiguous So Shooting Is Covered

Insured's "Intentional Act" Law Suit Not Covered

Intended Act Determined Not Covered Even If Results Were Different Than Expected or Intended

Intent to Inflict Superficial Injury Barred Coverage

Intentional Act Exclusion Held Not Applicable When Severe Injury Was Not Intended

Intentional Act Exclusion Inapplicable

Intentional Conduct Not Covered

Intentional Damage Held Applicable Although Damage Was More Severe

Intentional Injury Covered By Homeowners Insurance for Death, Damages Caused By Youths

"Intentional" Vs. "Negligent" Acts Coverage Debated In Homeowners Insurance

Insured's Voluntary Drunkenness Does Not Justify Application of Policy's Intentional Act Exclusion

Policy Excludes Grandmother's Negligent Supervision

Porch Brawl Triggers Coverage Dispute

Self-Defense or Malicious Harm?

Shooting Incident Excluded As Criminal Activity

Sexual Misconduct Claim Denied

Was Scoop Incident An Accident?

Was Hockey Stick Attack Intentional Act?

Wrongful Death Claim Arising from Providing Illegal Drugs