No Potential for Coverage
For liability insurance to provide defense or indemnity to an insured the event causing the injury must be contingent or unknown to the insured. For that reason insurance may not provided defense or indemnity to an insured who causes an injury by intentional conduct.
In Travelers Commercial Insurance Company v. Jennifer A., USCA, 9th Circuit, 2017 WL 2684120, No. 15-15841, (6/21/17) the Ninth Circuit was faced with an insurance coverage dispute between a claimant, Appellant, and an insurer, Travelers, which provided a homeowners’ liability insurance policy to the insured, third-party Jeffrey W. Jeffrey who allegedly had contemporaneous, unprotected sex with multiple partners, thereby placing Appellant in fear of contracting HIV and hepatitis.
Jeffrey’s policy provided a duty to defend or indemnify claims for bodily injury caused by an “occurrence,” which is defined as “an accident.” The issues are whether Jeffrey’s conduct triggers a duty to indemnify or defend Jeffrey, and whether an alleged ambiguity affirmative defense precluded judgment on the pleadings.
Jeffrey’s acts of unprotected sex with other women, the conduct for which liability was imposed, were deliberate acts and therefore were not accidents within the meaning of the policy. As such, the Ninth Circuit appropriately found that Travelers had no duty to indemnify Jeffrey under the homeowners’ insurance policy.
Additionally, since the duty to defend is broader than the duty to indemnify, the Ninth Circuit found that because the facts, as pleaded in Appellant’s complaint, create no potential for coverage, “there is no duty to defend.” [Uhrich v. State Farm Fire & Cas. Co., 135 Cal. Rptr. 2d 131, 137 (Ct. App. 2003) (quoting Quan v. Truck Ins. Exch., 79 Cal. Rptr. 2d 134, 138 (Ct. App. 1998)).]
Therefore, the Ninth Circuit also concluded that Travelers had no duty to defend Jeffrey against Appellant’s lawsuit because the allegations did not raise any possibility of coverage.
Finally, Appellant’s ambiguity defense is a defense that challenges the prima facie case put forward by Travelers in its complaint for declaratory judgment. Because contractual ambiguity is a question of law for the court to decide, and because the term “accident” is not ambiguous under California law, the district court appropriately granted judgment on the pleadings.
The Ninth Circuit, in a concise opinion, concluded that unprotected sex is intentional and, therefore, not a contingent or unknown event. Since the conduct was intentional and the injuries claimed were intentional and, therefore, not insurable.
This article and all of the blog posts on this site digests and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide
The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=214624, or 800-285-2221 which is presently available and “Diminution of Value Damages” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=203226972
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