The Rough Notes Company, Inc., is not legal counsel and we cannot give legal advice. What we can do is offer some things to think about with regard to the question presented and one possible interpretation of some of the coverage forms.
Q The following situation has occurred. A son, age 20 at time of loss, lives in parents' household. The son has his own auto policy, but the parents believe that he is considered an insured under their homeowners and umbrella policies by endorsement.
Last fall, the son was driving his own vehicle. He drove into a "road rage" situation and became the target. The other driver got out of the vehicle, reached into the son's vehicle and started beating the son. The son grabbed his own gun (which he has a permit to carry) and shot the other driver in the leg.
The case went to the grand jury last week. The grand jury declined to indict the son stating that it was a clear case of self-defense.
The other driver plans to sue. The parents are filing a claim with the insurance company but are worried about coverage.
The questions are:
* Is coverage available under the parents' homeowners policy?
* Is coverage available under the parents' umbrella policy?
* Is coverage available under the son's
auto policy?
A Let's start by looking at the policies one
at a time.
Parents' Homeowners Policy
There is no coverage under the standard homeowners policy. The son, if under 21 and a resident of the parent's household, is an insured; however, even the parents would not be covered in this situation due to Section II-Exclusions, where it states:
"Coverage E-Personal Liability and Coverage F-Medical Payments to Othersdo not apply to 'bodily injury' or 'property damage':
...f. arising out of:
(1) the ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including..."
Most courts would now agree that this type of loss is one that is directly attributable to the ownership, maintenance or use of a motor vehicle. The son encountered a road rage situation while operating his vehicle, and the other driver threatened and injured the son while the son was still in the vehicle so it is most likely excluded under the homeowners.
Son's Auto Policy
Obviously, the son is the insured under his own auto policy.
In the Part A-Liability Coverage, Insuring Agreements of the relevant personal auto policy it states:
"A. If a limit of this coverage is displayed on the declarations, we will pay damages for 'bodily injury' or 'property damage' for which any 'insured' becomes legally responsible because of an auto accident."
Unfortunately, there is no definition provided in the policy of auto accident. When no contract definition exists, the commonly understood definition of a term is used. Webster's Dictionary defines an accident as:
"an unforeseen or unexpected event; a mishap, or disaster; chance"
It would appear that this incident would qualify as an accident. Since it directly relates to the usage of the automobile, it stands to reason that the personal auto insuring agreements would cover it.
Now we will look at the exclusions.
Exclusion A. states that there is not liability coverage for an insured:
"1. Who intentionally causes 'bodily injury' or 'property damage'."
At first glance, this exclusion might lead one to the conclusion that there is no coverage under the personal auto policy; however, let's look at this a little more closely.
Most courts in determining the validity of the intentional or expected exclusions in liability policies have been seriously considering the issue of intent. The son did not initiate the situation. If the son meant actual harm, he could have shot the assailant in the head or heart or shot the assailant multiple times. The son was defending himself rather than seeking to cause injury to another person. Further supporting this is the grand jury verdict of self-defense.
Both the homeowners policy and the umbrella policy (which we will look at in a moment) have wording to the effect that intentional injury is covered if the injury was inflicted to prevent injury to persons or property. The personal auto does not have similar wording. Thus, an insurer may cite this wording; and, while the decision will vary according to state and jurisdiction, most courts have looked seriously at intent when determining coverage. In this incident, the son would have a strong case for coverage under the personal auto policy.
Parents' Umbrella Policy
If coverage is denied under the son's personal auto policy, what about coverage in the parents' personal umbrella?
In this particular umbrella, insured is defined as:
"residents of your household who are your 'relatives' and under the age of 21 under your care;"
A 20-year-old son would qualify as an insured.
The umbrella's insuring agreement states:
"We will pay on behalf of the 'insured' for 'ultimate net loss' in excess of the 'retained limit' which the 'insured' will become legally obligated to pay as damages because of 'personal injury' or 'property damage'."
The only applicable exclusion would be the expected or intended exclusion but it has additional wording:
"This exclusion does not apply to 'personal injury' resulting from a reasonable action by one or more 'insured' in:
1. Preventing or eliminating danger in the operations of 'automobiles', 'recreational vehicles' or watercraft; or
2. Protecting persons or property."
The son appears covered and the incident does not appear to be excluded by this or any other relevant exclusion, so if coverage is determined unavailable under the personal auto policy there should be coverage under the umbrella.
Consideration should be given to contacting the insurers of all three policies and giving proper notice as soon as possible to all three, as required in the applicable duties in event of loss provisions. No possibility of coverage should be discarded without the careful review and evaluation of the insurer.
What follows are some relevant court cases.
Intent to inflict superficial injury barred coverage
Judgment for a homeowners insurer was appealed by a boy who was shot in his left eye by a friend who aimed and fired a BB gun in his direction. The trial court had granted summary judgment to the insurer of the friend's parents on the basis of the following intentional act exclusion applicable to personal liability coverage and medical payments to others coverage:
"The insurance afforded by the policy shall not apply to bodily injury or property damage expected or intended from the standpoint of the insured. This exclusion does not apply to bodily injury resulting from the use of reasonable force to protect persons or property."
It is undisputed that the two fourteen year-old boys had been playing "war" with their BB guns in the back yard of the home of one of the boys. As they hid behind various objects, playing " shoot-out," one was hit in the side and felt a sting and pain. He then shot in the general direction of where he believed his "adversary" to be, causing the serious eye injury.
The distraught boy testified that "...I was intending to shoot him maybe in the arm or leg just to cause a slight sting, sharp pain like he did to me....I didn't want to cause such serious injury."
The appeal court cited Gouger v. Hardtke, 167 Wis.2d 504, 512, 482 N.W.2d 84, 88 (1992) as follows: "An intent to cause injury exists where the actor subjectively intends to cause injury or where injury is substantially certain to occur from the actor's conduct."
It then quoted from Pachucki v. Republic Insurance Company, 89 Wis.2d 703, 712, 278 N.W.2d 898, 903 (1979): "So long as the actor intends to inflict a personal injury, the requisite intent is established even though the actor did not intend the particular injury that occurred."
The court found it irrelevant that the boy did not intend to injure his friend's eye, since he "... intended nevertheless to cause injury; a sting." It concluded that the injury was excluded from coverage under the homeowners policy.
The judgment of the trial court was affirmed in favor of the insurance company and against the claimants.
(Chapman et al., Plaintiffs-Coappellants v. Wisconsin Physicians Service Insurance Corporation et al., Defendants. Wisconsin Appellate Court. No. 93-1481. September 15, 1994. CCH 1994 Fire and Casualty Cases, Paragraph 4982.)
469_C035
Intentional act exclusion held not applicable
when severe injury was not intended
Two male high school students engaged in a fistfight, presumably over a young female classmate. One suffered severe eye injuries. A lawsuit was initiated on behalf of boy number one against boy number two. The homeowners insurer of boy number two's family brought a declaratory judgment action to determine whether the boy was entitled to defense and insurance coverage under personal liability provisions of the policy.
The case was referred to a special referee for a decision based on testimony, medical records and the provisions of the insurance policy. The insurer appealed the referee's finding that coverage was applicable and his order that the insurer was required to defend and pay money damages adjudged in favor of the claimants.
The South Carolina Supreme Court noted that the special referee reached his decision on the basis of a precedent set earlier in Miller v. Fidelity Phoenix Insurance Company, 268 S.C. 72, 231 S.E.2d 701 (1977). Therein the court held that a "two-prong analysis" was required to test the validity of the intentional act exclusion in a homeowners policy.
The pertinent exclusion provides that coverage does not apply to bodily injury "... which is expected or intended by the insured." The analysis requirement established by the court requires determination of whether:
1. the act causing loss was intentional
2. the insured intended the results of the act.
On the first count, the court found that the act of hitting was intentional, even if it was done in self-defense. On the second, the court found that it could be concluded from the evidence that the defendant boy "did not intend a specific result." It appeared that he was reacting to the other boy, who may have been provoking him, in self-defense and was only trying to protect himself, not cause a severe injury.
The decision of the special referee was affirmed in favor of the insureds and against the insurer. The insurance company had a coverage obligation.
(Vermont Mutual Insurance Company , Appellant v. Singleton et al., Respondents. South Carolina Supreme Court. No. 24,105. June 20, 1994. CCH 1994 Fire and Casualty Cases, Paragraph 4949.)
469_C036
Intentional damage exclusion held applicable
although damage was more severe than expected
The issue for the appeal court in this case was whether Section II personal liability insurance in a homeowners policy covered damage beyond that intended by the named insured's minor son who, along with others, vandalized a house.
The boys broke into the house, hit lights with sticks, smashed windows and caused other damage. Finding some matchbooks in a box, they lit them and flipped them at each other. One fell on a sofa, starting a fire that destroyed the house. An ensuing lawsuit included the father and son as defendants.
The homeowners insurer sought a declaratory judgment that it had no coverage obligation by virtue of a policy exclusion, applicable to personal liability insurance, for damage which is "expected or intended by the insured." It appealed from a trial court denial of its motion.
The insured father argued that his son did not "expect or intend" the house to burn down. He acknowledged that the window and lighting equipment breaking and some other damage was intentional but contended that the fire was not caused by those acts.
The appeal court found the evidence undisputed that the boy "expected" and "intended" to damage the property. Among cases involving similar circumstances it had previously reviewed, it cited Stein v. Massachusetts Bay Insurance Company, 172 Gs. App. 811, 813 324 SE 2d 510, in which it concluded that:
The pertinent exclusion "... is applicable if the insured acts with the intent or expectation that ... injury occur, even if the actual, resulting injury is different either in kind or magnitude from that intended or expected."
The court agreed with the insurer that the exclusion applied whether or not the boy intended the destruction of the house by fire. The lighting and throwing of matchbooks, including flipping one on a sofa, was deliberate and damage could be expected. The severity of the damage, the court said, "does not vitiate the element of intent."
The judgment of the trial court was reversed in favor of the insurance company and against the insured.
(Georgia Farm Bureau Mutual Insurance Company, Appellant v. Purvis, Appellee. Georgia Court Of Appeals. No. A94A0804. April 19, 1994. CCH 1994 Fire and Casualty Cases, Paragraph 4962.)
We write a number of financial institutions in the area. In recent years most of the larger financial institutions have been bought by out-of-state banks, so we now write mostly small town banks ranging from $20 million to $100 million.
QOur insured was looking under the hood of his granddaughter's vehicle and forgot to put the hood brace down before he closed the hood. As a result the hood buckled. The insured is turning in a claim for damage to the hood under his HO3.
The car was on the insured's property at the time of the incident. There also is a question about the granddaughter being a household member; she moved from Texas to Oregon about a month ago and is staying with her grandparents.
AYou indicated that the home was covered under an HO3, so I've assumed that the reference is to an ISO policy form HO 00 03.
It appears to me that you're asking the following questions:
1. Is the loss described eligible for coverage under the HO 00 03 form?
2. Does the granddaughter's "status" under the policy affect any coverage? Specifically, is she a "household member"?
Let's begin with question one. Under Section II, Liability, the policy states:
COVERAGE E - Personal Liability
If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:
1. Pay up to our limit of liability for the damages for which the "insured" is legally liable. Damages include prejudgment interest awarded against the "insured";
It appears that the damage caused by one of the insureds (damage to their granddaughter's car hood) definitely qualifies as "property damage." This loss may qualify for coverage under the policy. Let's study this situation further by focusing on the following policy wording from Section II, Exclusions:
1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to "bodily injury" or "property damage":
f. Arising out of:
(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an "insured";
In light of the above language, it would appear that the situation could be eligible for coverage, but it depends upon what the insured who caused the loss was doing with the car at the time of the loss. While coverage may exist if an insured were merely examining the engine beneath the hood, the opposite could be true if the incident involved repairing or maintaining a car, or any "business" use.
The possibility of coverage depends also upon whether the vehicle is owned or controlled by an insured. The HO 00 03 includes the following definition:
"Insured" means you and residents of your household who are:
a. Your relatives; or
b. Other persons under the age of 21 and in the care of any person named above.
In this instance, a granddaughter has already been visiting the grandparents for about one month. The granddaughter left a living arrangement in another state. In light of this information, it is my opinion that "property damage" was caused by an "insured," but that no coverage is available under Section II of the policy because the damage was suffered by another insured. The granddaughter gives every indication of being an insured since she:
* is related to the insured grandparents
* has been living in the insured household for an extended period prior to the loss, and
* moved from out of state and, currently, does not have her own residence. *