Strategies, Challenges, and Answers

A Definition Of Accident

In virtually all liability policies, there must be an “occurrence” before there is coverage.  Many policies define an “occurrence” as an “accident”.  In other words, where there is no “accident”, there is no homeowner’s liability coverage.  But what if your policy does not define the term accident?  Perhaps you can do what the Nevada Supreme Court did in the case of Fire Ins. Exch. v. Cornell, 120 Nev. 303,  90 P.3d 978 (2004), namely, look in the dictionary.

1006530_broken_glass In that case, the Nevada Supreme Court addressed the question of whether a homeowner’s policy excluded liability coverage in connection with claims for negligent supervision of an adult child who commits statutory sexual seduction.  In that case, a nineteen-year-old child of the insureds engaged in sexual intercourse with a twelve-year-old neighbor.  The adult child lived with the parents.

The policy included an “intentional acts” exclusion that said that it did not cover “bodily injury or property damage which . . . is either . . . caused intentionally by or at the direction of an insured;  or . . . results from an occurrence caused by an intentional act of any insured where the results are reasonably foreseeable.”  The policy also included a specific sexual acts exclusion.

However, the policy didn’t define what an accident is.  To solve this problem, the Nevada Supreme Court looked in their dictionary and used a common definition of the term “accident” as being “a happening that is not expected, foreseen, or intended.”

In the end, the Nevada Supreme Court found that the carrier owed no duty to defend or indemnify the parents against allegation of negligent supervision of the adult child.  The issue of whether the carrier owed any duty under the policy to defend or indemnify the adult son was not addressed in the opinion.

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