Feb 5, 2019

Intentional Conduct Claims Litigation Considerations


What are The Three Essential Questions in an Intentional Act Insurance Claim?

This article attempts to explain the situation so even a nonlawyer can understand. First, there is no automatic bar to coverage just because there was some intentional conduct. So there remain three essential questions. Also, this kind of application often includes defendants allegedly acted intentionally. So they are believed to have no insurance or prima facie coverage. (proving alleged facts are adequate to support the effort).

The fact is that while insurance companies deter policyholders' claims of this nature, using intent may be denied, but that may not be the case at all. Before rejecting an intentional conduct claim, the insurance company should take the allegations seriously since the language of the policy and jurisprudence could prove liability.

The three intentional conduct claim considerations include:

  • Act or Injury: What was the deliberate conduct of the action or the injury? This is important because general liability policies often include language about “expected or intended” exclusions. There are also some states that have laws excluding coverage for acts of willful conduct. The issue is whether the insured intended to harm, or if the action alone is sufficient. One claim we often plead in California is "recklessness," which may or may not be intentional.

The most common example is when a driver hits a pedestrian due to speeding. Then it is a question of whether the driver exceeds the speed limit without intending to cause harm. When the pedestrian brings a legal claim for injuries due to intentional conduct by the driver, it is not uncommon for the insurance company to deny coverage.

Can You Challenge Denial of Insurance Coverage?

Depending on the state laws, the driver may be able to challenge the insurance coverage denial. Of course, it would be malpractice on the attorney's part only to plead intentional conduct or only one cause of action for that matter. So a mixed bag pleading is almost always par for the course.

In the state of California, a recent court case involving State Farm v. Frake (See also Google Scholar Here). In that case, the defendant struck his friend in a manner not intended to cause harm. So the court weighed the facts and ruled against coverage.

The insurance companies used this ruling to carry on with their fallacy. Their argument is no coverage exists in cases of intentional conduct ever. But when the facts show there was no intent to harm, such as speeding, there was no intent to cause injuries. So coverage would apply in that case. But there is no exact rule. In any event, when the injury or damage was unintended, coverage may apply.

The law continues to change, and it is essential for policyholders to examine any allegations, since insurers may not openly offer insurance claim support.

  • Allegations of Intentional Actions: In some cases, the claim of intentional actions may not only be against the person or their insurance company, but against a company who employs the individual. After all, corporations are historical "persons," even before the politically charged case of Citizens United reaffirmed this fact. For example, what if your insurance agent is accused of fraud? In this situation, legal action may get brought against the agent and the company for damages. The claim against the business is liable for the employment of the agent and the alleged fraud.

Was Your Claim's Denial Intentional?

In many cases, the courts have ruled that the insurance company for the business must pay the claim. In some situations, if the senior management or board of directors were not aware of the agent's misconduct. So there was no intent to harm by the company itself.

  • Insurance Coverage: When intentional conduct is alleged in the complaint, the kind of insurance policy must be considered. In the event of a speeding driver striking a pedestrian, the coverage would be the bodily injury in a general liability policy. In any case, insurance coverage involving personal injury coverage would apply. But some systems may include coverage for libel, slander, malicious prosecution, and other types of intentional torts.

Does Insurance Cover Defamation?

But when suing for slander or another intentional tort, the plaintiff must prove willful conduct. The facts will not determine automatic coverage in this situation in most states. But the carrier should pay the settlement and avoid trial. And this remains true even if there is willful acts exclusion. The same goes for fraud or criminal acts.

Coverage can remain because some conduct could be viewed as negligent. So it's covered. Or it could be because of an exception to public policy considerations, for example. So policyholders must assess the allegations. Next, they must look to the language of the underlying policy. Then they consider the law to determine if insurance will pay for litigation in the case. If you have a question about coverages, hire a lawyer to help you proceed.