A while back I wrote a series entitled, “Top 10 Commercial Insurance Myths & Misconceptions.” I did not cover the “Intentional Injury Exclusion” in that series, but perhaps I should have. Insurers continue to try to use this exclusion to argue that there is no coverage for injury or damage caused by a policyholder’s “intentional acts”. Insurers frequently refer to this exclusion as the “intentional acts exclusion,” despite the fact that the typical commercial insurance policy covers intentional acts so long as the policyholder does not subjectively intend to cause harm.
By invoking this exclusion, the insurer typically attempts to paint the policyholder as a “bad guy” unworthy of the insurance coverage for which it paid. Insurers often attempt to use the underlying plaintiff’s allegations against their own policyholder, and are eager to exploit allegations in the underlying complaint that accuse their policyholder of fraud or malicious intent. Many plaintiffs believe that the injury or damage they suffered was not merely the result of the defendant’s negligence, but rather due to malicious intent, or conduct so reckless that harm was certain to occur, and allege as such in their complaint. Rather than help their policyholder fend off such allegations, many insurers would rather side with the underlying plaintiff if it helps protect the insurer’s bottom line.
The standard “Intentional Injury Exclusion” states that the policy does not cover damage or injury that is “expected or intended from the standpoint of the insured.” Based on its plain terms, the exclusion has nothing to do with whether the policyholder intended to commit an act that caused harm, so long as the harm itself is unintended. An intentional act causing unintended harm remains an accident constituting a fortuitous “occurrence” under the policy.
Florida courts have rejected insurer’s attempts to apply tort principles of foreseeability to the application of the Intentional Injury Exclusion. See Prudential Property & Cas. Ins. Co. v. Swindal, 622 So.2d 467 (Fla. 1993). In Swindal, the policyholder was intentionally brandished a gun in the hope of frightening away the plaintiff when the gun accidentally discharged. The Florida Supreme Court held that the Intentional Injury Exclusion did not apply because the policyholder did not intend to harm the plaintiff. The intentional injury exclusion does not apply even in situations where an intentional act involves a foreseeable consequence of great harm or amounts to gross or culpable negligence. See State Farm Fire & Cas. Co. v. CTC Development Corp., 720 So. 2d 1072 (Fla. 1998).
Recently, the Fourth District Court of Appeals reaffirmed Florida’s view of the Intentional Injury Exclusion in Old Dominion Ins. Co. v. Concepts, 189 So.3d 293 (Fla. 4th DCA 2016). In that case, the policyholder was sued for making robocalls. Although the policyholder admitted in the underlying suit that it had violated state law, the evidence showed that the policyholder was unaware at the time it made the calls that it was breaking the law. Therefore, the court held that the Intentional Injury Exclusion did not apply.
So when does the Intentional Injury Exclusion apply? It only applies in those situations where either the policyholder is found to have intended to cause harm or where the policyholder’s intent to cause harm can be inferred by its actions. In the former situation, even when the policyholder is found to have acted with intent to injure, or is convicted of a crime, the insurer still has a duty to defend until this determination is made. The latter situation — which applies to the duty to defend as well as the duty to indemnify — has been narrowly applied in cases of sexual abuse of minors, in which Florida courts have refused on public policy grounds to consider whether an adult subjectively intended to harm a minor when engaging in sexual contact.
It is understandable that Florida courts have narrowly interpreted the Intentional Injury Exclusion. It is well-established that exclusions are interpreted narrowly, and the duty to defend is applied broadly. An aggrieved plaintiff should not be empowered to unilaterally vitiate a policyholder’s contractual insurance protections merely by alleging that the policyholder intended to cause harm. Policyholders are entitled to the benefit of the doubt, and the benefit of the coverage they paid for.