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Litigation: The no coverage for intentional conduct myth

Companies should consider three important questions before deciding if they should pursue coverage for intentional conduct claims.

Defendants in litigation often (wrongfully) presume that if they are alleged to have acted “intentionally,” they prima facie have no insurance. However, in many instances, intentional conduct claims are covered, despite continued insurer efforts to convince policyholders that if the claim includes the word “intent,” the coverage response may include the word “denial.”

Thus, before a company concludes that it should not pursue coverage for intentional conduct claims, it should carefully consider the allegations against it, its policy language and applicable case law. The following summarizes three important considerations with respect to intentional conduct claims.

This issue recently was addressed by a California court in State Farm v. Frake. In this case, the defendant intended to playfully hit his friend, but did not intend the level of injury suffered by his friend. The court, based upon the facts, ruled against coverage. Insurers have relied upon this ruling to perpetuate their myth that regardless of the facts or circumstances, no coverage ever applies if an injury flows in any manner from the policyholder’s intentional conduct. However, this is not true.

At most, the decision clarifies that the facts matter, and there is no absolute rule that applies in this context. In fact, the court explicitly recognized that “when any aspect in the causal series of events leading to the injury or damage was unintended by the insured and a matter of fortuity,” then coverage may apply. In other words, in the speeding car example, the driver did not intend for the other car to hit the pedestrian.

3. Which coverage applies? The analysis regarding coverage for intentional conduct claims also is impacted by the coverage being considered. In the speeding driver example, the policyholder likely would pursue coverage under the bodily injury provisions of his general liability policy. If the insurer can show the requisite intent, then the claim may not be covered. However, a different rule would apply if the claim involved the policy’s personal injury coverage. That coverage is triggered if the claim involves one of the explicitly enumerated offenses in the policy, many of which involve intentional conduct.

For example, certain policy forms cover malicious prosecution, libel, slander and other intentional torts. If a policyholder is sued for malicious prosecution, the underlying claimant must prove willful conduct. That fact should not operate as an automatic coverage bar. If it did, the coverage arguably would be illusory—the policyholder paid premium for malicious prosecution coverage, which, by its nature, involves intentional conduct. The insurer expressly agreed to cover such claims and, thus, should not in most states after a claim is made be able to avoid coverage based upon the intentional nature of the claim.


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Linda Kornfeld

Linda D. Kornfeld is a partner in Jenner & Block’s Litigation Department and is a member of the Insurance Litigation and Counseling Practice. She has...

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