Insurance. Intentional act by “an insured” precludes coverage for innocent co-insured.

Co-operative Insurance Companies v. Woodward, 2012 VT 22  (Reiber, C.J.)

Father appeals the trial court’s declaration of no coverage for the claims made in the lawsuit filed against homeowner for negligent supervision and damages arising out of the abduction, assault, and death of his daughter. Homeowner was formerly married to uncle who is alleged to have kidnapped, sexually assaulted, and murdered  daughter. Homeowner’s insurer brought a declaratory judgment action asking the trial court to hold that its policy does not cover these claims.  The trial court decided the case on summary judgment, holding that the insurance policy excludes intentional acts by uncle, who was “an insured.” The court rejected father’s argument that the separate insureds, or severability, clause provides coverage for homeowner.  We affirm.

The policy exclusion states, the “ policy does not apply to:  …’bodily injury’ or ‘property damage’...  that is the result of an intentional and malicious act by or at the direction of an ‘insured’." A policy exclusion for intentional acts by “an insured” generally bars coverage for claims made by any insured under the same policy.  N. Sec. Ins. Co. v. Perron, 172 Vt. 204, 220 (2001).  If the exclusion precludes coverage for certain acts by “the insured,” however, noncoverage of one insured does not affect coverage for claims against other insureds.  Id. at 221-22. The alleged acts are inherently harmful and so certain to cause injury that we must conclude as a matter of law that uncle had intent to harm.  Therefore homeowner is barred from coverage because the policy at issue uses the collective term “an insured.”

Despite this result, father contends that the policy contains a severability clause which would allow homeowner to be covered since uncle, not homeowner, committed the intentional act.  We assume without deciding that the provision at issue is a severability clause. Because exclusions for “an insured” serve to collectively bar all insureds, and because of the weight of decisional authority, we conclude that the clause at issue does not create ambiguity and  has no effect on—and cannot override—the intentional-acts exclusion for certain acts committed by “an insured.”