Strategies, Challenges, and Answers

Is An Intentional Acts Exclusion Ambiguous And Unenforceable Against A Co-Insured For Allegations Of Failure To Supervise The Intentional Actor?

As reported HERE, the Nevada Supreme Court concluded in the case of Fire Ins. Exch. v. Cornell, 120 Nev. 303, 90 P.3d 978 (2004), that a homeowner’s carrier had no duty to defend or indemnify the parents of an adult child who committed statutory sexual seduction against allegations that the parents negligently supervised the adult son.  In that case, the policy did not just exclude coverage for the intentional actor.  The policy language was broader.  The policy said that that there would be no coverage for damages intentionally caused by ANY insured.  Therefore, the denial for coverage of the parents was upheld because of the intentional acts of the adult child.

Insurance policy interpretation, Intentional Acts Exclusion, Nevada Coverage Law, Nevada Bad Faith Law, Mills & Associates Nevada Insurance and Coverage Lawyers, Las Vegas Insurance and Coverage Lawyers 702-240-6060 This very issue was recently considered by the California Supreme Court, with a very different outcome.  In the case of Minkler v. Safeco Ins. Co. of Amer., 232 P.2d 612, 110 Cal. Rptr. 612 (2010), the Court concluded that an exclusion barring coverage for intentional acts did not bar coverage for failure to supervise or otherwise prevent the intentional act. In Minkler, a mother was sued for negligent supervision of her adult son who allegedly sexually molested a minor in her home. The son was an additional insured under the mother homeowner’s policy.  The “intentional acts” exclusion was worded very similarly to the exclusion in the Cornell case.  Nevertheless, the California Court concluded that the mother was entitled to coverage under the liability provisions of her homeowner’s policy. The Court pointed to the “severability insurance” clause of the policy reflecting that the insurance applied to each insured individually.  Thus, the court found the language of the exclusion to be ambiguous and extended coverage to the mother for her negligent supervision.

The issues of the severability clause and the “ambiguity” of the policy language do not appear to have been raised in the Cornell case.  Therefore, it remains to be seen how the Nevada courts will respond to such an argument.