Expected or Intended Injury Exclusion
Understanding Liability Exclusions for Intentional Events
Contrary to what many people think, a general liability policy does not exclude intentional acts. However, Bodily Injury and Property Damage Liability (Coverage A) does exclude intentional injury. An exclusion entitled Expected or Intended Injury eliminates coverage for injury or damage that an insured inflicts on someone willfully. This article will explain the purpose of this exclusion, and how it affects your coverage under the policy.
It is important to understand that Bodily Injury and Property Damage Liability is designed to cover accidental events. Coverage A applies to claims or suits against an insured for bodily injury or property damage. For a claim to be covered, the injury or damage must have been caused by an occurrence. That is, the bodily injury or property damage must have resulted from a fortuitous event.
Expected or Intended Injury
The "expected or intended injury" exclusion typically appears in the first paragraph in the Exclusions section under Coverage A. It excludes bodily or property damage that is expected or intended from the standpoint of the insured. Its purpose is to prevent someone from obtaining insurance coverage for injury or damage that person caused intentionally. Here is an example.
Jim is the sole owner of Jim's Warehousing Inc. Jim operates his business in a warehouse he rents from Steve.
Jim believes that one end of the building is deteriorating, and he asks Steve to make repairs. Steve refuses, stating that the building doesn't need fixing. Jim decides to force Steve to make repairs.
Late one night, Jim sets fire to the disputed end of the building. The fire causes $50,000 in damage.
When questioned by a fire investigator, Jim says the cause of the fire was likely a hotplate he used in his office. He must have accidentally left the hotplate on when he left the building. The investigator doesn't believe Jim's story and concludes that the fire was intentionally set.
Steve sues Jim for the fire damage, and Jim files a claim under his firm's liability policy. Jim's insurer denies coverage for the claim, citing two reasons. First, the fire damage to the building was not accidental according to the fire investigator's report. Thus, the damage did not result from an occurrence. Secondly, the claim was subject to the expected or intended injury exclusion. When Jim set the fire, he clearly expected that fire damage to the building would occur.
The expected or intended injury exclusion applies to injury or damage that is expected or intended from the standpoint of the insured. "The insured" generally means the insured named in a claim or suit. In the previous example, Jim is the subject of Steve's suit. Thus, the exclusion applies to injury or damage that was expected or intended by Jim.
An insured may be sued because of injury or damage that was intentionally committed by another insured.
For example, Tom is employed as a salesperson by Happy Hardware, a home improvement store. One day, Tom is helping Ned, a customer, choose a wrench. Ned is feeling cranky and begins to berate Tom. He says that Tom is stupid and knows nothing about tools. Tom eventually loses his temper. He grabs a wrench and whacks Ned on the side of his head with it.
Ned is injured in the attack. He sues Tom for bodily injury, alleging that he injured Ned intentionally. Ned also sues Beth, the store owner. As Tom’s employer, she is vicariously liable for actions he commits while performing his duties on behalf of her company. Beth forwards the lawsuit to her general liability insurer.
Beth's insurer refuses to pay any damages assessed against Tom, citing the expected or intended injury exclusion. The insurer contends that when Tom picked up the wrench, he intended to hurt Ned.
However, it agrees to cover the claim against Beth. Beth did not commit the act that caused Ned's injury. She didn’t ask Tom to hit Ned, and didn’t expect he would do so. From Beth's standpoint, his actions were unforeseen. Thus, the expected or intended injury exclusion does not apply to her.
Exception to Protect People or Property
The expected or intended injury exclusion contains an exception. Coverage is afforded for bodily injury that results from the use of reasonable force to protect persons or property. That is, the policy covers an injury inflicted intentionally by an insured on a third party if the injury resulted from an attempt by the insured to protect people or property.
In the hardware store scenario cited above, suppose that Ned is shopping for a ratchet wrench. A clerk directs him to the tool aisle. She says there's a ratchet wrench at the end of the aisle, and it's the only one left in stock. Ned is making his way down the aisle when Sue, another customer, removes the wrench from the rack. Ned is irate. He yells at Sue, demanding that she hand over the wrench. When she refuses, he grabs her by the neck. Tom hears the commotion and runs to the tool aisle. He tries to pull Ned's hands off Sue's neck but is unsuccessful. Sue is turning blue. In a panic, Tom snatches another wrench off a rack and hits Ned on the side of his head. Ned releases Sue and falls to the floor, clutching his head.
If Ned sues Tom for bodily injury, the claim will likely be covered by the store's liability policy. Tom intentionally injured Ned for the purpose of protecting Sue. Assuming his use of force is considered reasonable, the claim against him should be covered under the exception to the expected or intended injury exclusion.
The word reasonable is not defined in the policy. Thus, the reasonableness of the force used by an insured can be a matter of debate. If an insurer and a policyholder cannot agree whether force was reasonable, a court will make that determination.
In standard ISO general liability policy, the exception to the expected or intended injury exclusion applies to bodily injury only. Nevertheless, many insurers will extend the exception to cover property damage as well. This extension is often provided for little or no additional premium.
Liability policies don't define the words expected or intended, and courts interpret these terms in various ways. A court in one state may construe these words differently than those in another. Because of these different interpretations, courts in different states may not apply the expected or intended injury exclusion in the same manner.
Assault and Battery
The expected or intended injury exclusion is sometimes referred to as the "assault and battery exclusion". This is a misnomer since the standard liability policy makes no mention of assault or battery. Assault and battery are often lumped together, but these terms represent two different acts. An act of assault or battery may qualify as a crime (violation of a public law), a tort (violation of someone's civil rights), or both.
What Is Assault?
The term assault generally means a threat by someone to harm another person. While the person being assaulted must fear for his or her safety, no physical contact between the parties need occur. An act may qualify as an assault even if the perpetrator didn't intend to cause physical harm.
For example, suppose that Tom, the hardware salesperson, is being badgered by Ned (the cranky customer). After Ned insults him verbally, Tom loses his temper. He grabs a hammer and threatens to beat Ned over the head with it if Ned doesn't stop talking. Tom never touches Ned with his body or the hammer. However, Ned believes he's about to be injured. Bill later sues Jim for assault.
What Is Battery?
Battery typically means intentional physical contact inflicted on a person without his or her consent. The contact must be offensive or harmful to the victim. However, the perpetrator need not intend to injure the victim. Essentially, battery is assault that results in physical contact.
In the previous example, suppose that Tom punches Ned in the nose instead of threatening him with a hammer. Tom's act is intentional. The contact is harmful to Jim as he sustains a sore nose. Tom's act will likely qualify as battery.
An act of assault or battery may be subject to the expected or intended injury exclusion. For the exclusion to apply, the act must result in bodily or property damage to a third party. Moreover, the injury or damage must be expected or intended from the standpoint of the insured. For instance, Tom (the hardware store employee) probably committed an act of battery when he lost his temper and hit Ned in the head with a wrench. If Ned sues Tom for the injury, the claim will not be covered by the hardware store's liability coverage.
Certain types of businesses are prone to claims based on assault or battery. These include security services, public entities, police departments, bars and taverns, and restaurants that serve alcoholic beverages. General liability policies provided to such businesses may specifically exclude assault and battery. This exclusion may be combined with the expected or intended injury exclusion or added separately. Some insurers will remove the assault and battery exclusion for an additional premium.