What is an “Intentional” Loss?
Property insurers occasionally grapple with intentional losses. Theft. Embezzlement. Set fires. Vandalism. Pipes frozen on purpose.
What happens when a man suffering from dementia uses a permanent marker to trace over the artist’s signature on a priceless piece of artwork in his home? What about when a woman hears the voice of Satan, telling her that if she does not burn down her home he will lay waste to the eastern seaboard, and she later sets the fire to save the world?
Intentional Loss Exclusions bar coverage for losses arising out of an act by an insured done with the intent to cause damage. Intent… what’s going on in the mind of another person? The answer may be anything but clear, typically requiring a detailed investigation. The facts and circumstances of the loss will be evaluated. Claims professionals will be tasked with concluding whether or not a loss was intentional.
Pennsylvania courts give some guidance. A federal court weighed in just a few weeks ago, concluding that whether damage is accidental versus intentional will be evaluated from the viewpoint of the insured. See Tartour v. Safeco Ins. Co., 2020 U.S.Dist. LEXIS 16271 (E.D.Pa. Jan. 30, 2020). Pennsylvania’s Superior Court concluded decades ago that an insured’s act is intentional if he/she desires to cause the consequences of his action, or if he/she acted knowing the consequences were substantially certain to result. See United Servs. Auto. Ass’n v. Elitzky, 517 A.2d 982 (Pa.Super. 1986).
This brings us back to the first question: what is an intentional loss? In Pennsylvania, our courts are guiding us: if you start a fire, the surrounding property will burn. This result is substantially certain.
The attorneys in Timoney Knox’s Insurance Industry Group have extensive experience in dealing with these types of issues. If you have any questions, or would like additional information, please feel free to reach out to a member of our team.