COURT NARROWLY CONSTRUES CRIMINAL ACT EXCLUSION
Most liability insurance policies include a provision whereby the insured is not insured for intentional acts – called the “intentional acts” or “criminal acts” exclusion. Typically, such provisions only exclude insurance coverage where the insured policyholder acted intentionally (rather than negligently) and intended the conduct to cause injury.
In Wilshire Ins. Co. v. S.A., the Arizona Court of Appeals was faced with an insurance coverage dispute where the insured policyholder had sexually assaulted a 15 year old while locked in the company’s basement. The insured pled guilty to sexual assault, among other things.
The insurance policy provided that there was no coverage for conduct “arising out of a criminal act committed by or at the direction of any insured.” Based on that clause and the public policy that insurance should not protect those who intentionally cause injury, the Court affirmed the trial court’s determination that there was no coverage for the assault. The Court noted that this was not a case where the insured acted intentionally, but unintentionally caused injury.