An attack victim files a claim against his
attacker’s parents’ homeowners policy
By Bruce D. Hicks, CPCU, CLU
The Court Decisions column is a popular part of Rough Notes magazine. One reason for this is that the court room is where the promises made in an insurance contract often become real. All insurance professionals can develop “what if” scenarios, but until those scenarios are tested with an actual loss and a court decision, they remain mental exercises. This column comes from the industry expert editors of Policy Forms & Manual Analysis (PF&M). This is a knowledgebase consisting of more than 15,000 pages of coverage explanations from Rough Notes Company’s digital solutions. The editors are going to dig a little deeper into one of those court decisions to identify a coverage problem, provide possible solutions and/or offer broader perspectives.
[W]hy did the carrier base its denial upon an exclusion rather than on the wording of the base policy?
In our latest featured case, Dorchester Mutual Insurance Company v. Miville et al., the loss involved a vicious attack during which the claimant was seriously injured after being assaulted with repeated punches and kicks. Apparently, there was no motive for this act.
The attacker lived with his parents, who were insured under a homeowners policy. That homeowners policy included an abuse and molestation exclusion. It was upon that exclusion’s basis that, after the victim made a claim, the insurer denied the loss. The victim’s next move was to file a lawsuit against the attacker’s parents on several grounds.
After a lower court found in favor of the insurance company, the victim appealed. The higher court reversed the initial decision and sent the case back (remanded) to the lower court to handle in light of the reversal.
This is an instance where a theoretical insurance tribunal would certainly have been handy. Certainly, some other entity should have laid eyes on the situation. While our imaginary authority would have no power to make a binding decision, it may have cleared up some confusion and possibly kept the issue out of court. Since we’re here, why don’t we act as a reviewer?
So, the loss is straightforward. A claimant wanted to be paid for serious injuries caused by a member of the insured household. As it turns out, the attacker was 30; he was arrested and convicted of two counts of assault.
The claim denial and subsequent litigation turned upon the applicability of the homeowners policy’s abuse and molestation exclusion. The courts did not agree over whether the exclusion nullified the insurer’s responsibility to respond to the loss.
Quite a bit of time and money was spent arguing about an exclusion. These arguments are merited because coverage often hinges on policy wording and how it’s eventually interpreted. On the other hand, the usefulness depends upon whether their focus makes sense.
As an imaginary representative of the insurance tribunal, I suggest that sense failed to materialize.
What is the obligation of a homeowners insurance policy? It is to respond to losses that qualify for coverage under the policy, as long as the policy premium has been paid. The process in determining loss eligibility begins with whether the policy is in force. If it is, the question turns on a definition similar to the following (drawn from our PF&M Homeowners Coverage Analysis):
This term refers to an accident and also to repeated exposure to similar conditions. However, in order for the accident or repeated exposure to be considered an occurrence it must cause “bodily injury” (BI) or “property damage” (PD) and that BI or PD must take place during the policy period.
Regardless of whether the policy is amended by additional coverage or exclusions, a loss has to, first, fall within the policy insuring agreement and applicable definitions. The loss in the featured case checks several required boxes. It takes place with an in-force policy, it occurs during a policy period, it was caused by an insured and it included bodily injury. These are elements of the loss that the litigating parties, the courts and the “tribunal” agreed upon.
However, there is a critical item that the actual parties and the courts didn’t appear to be interested in. The tribunal asks: “Did the loss involve an occurrence?” The tribunal answers “no!”
From its perspective, the loss was not an accident. The claimant’s injuries resulted from an unprovoked attack. It was a deliberate action by a household member. The action did not involve self-defense, nor defense of another or of property. The perpetrator was not a legal minor. As he was arrested, indicted and convicted, it is logical to assume that the attacker was legally incompetent.
In light of the absence of an accidental event, why did this end up being litigated? Or, since it did reach the courts, why did the carrier base its denial upon an exclusion rather than on the wording of the base policy? This is not so much a matter of digging deeper as it is about whether a shovel was necessary.
Bruce D. Hicks, CPCU, CLU, is senior vice president, Technical & Educational Products Division, at The Rough Notes Company. He has more than 30 years of property/casualty insurance experience, including personal and small business underwriting as well as compliance duties for several national and regional insurers. Active in the CPCU Society, Bruce served as a governor of the organization from 2007 through 2010 and currently serves on its International Interest Group Committee.