Expected or Intended Harm I
Prof. Bill Long 3/28/05
This and the next mini-essay will treat the "expected or intended" harm exclusion in the CGL policy (2.a., p. 395). On the one hand, your first reaction might be, 'Why do we need to focus on this exclusion? It is clear, from the perspective of public policy, that intended harm ought not to be covered, so why the focus on it?' Well, good question. The reason is that courts have come up with a variety of readings of the phrase "expected or intended" and have even come up with three different interpretations of the word "intended." Thus, the purpose of these essays is to lay out the contours of the debate over the meaning of these terms.
A Historical Word
Prior to the 1966 revision of the CGL, the exclusion provided that "bodily injury or property damage caused intentionally by or at the direction of the insured" would not be covered. Clear enough? Not really. The phrase "caused intentionally" became the focus of disagreement. It wasn't clear whose viewpoint was to be used to determine whether a loss was "caused intentionally." Was it from the perspective of the victim or the one committing the harm? Because the spirit of the late 1960s and was "consumer-friendly," courts were more than willing to try to extend insurance coverage as far as feasible, and they normally interpreted the clause to be from the perspective of the victim. Thus, since victims usually never expect nor foresee an injury, the injury could not have been intentional--hence there would be coverage. Of course, this dominant view was subject to criticism, and it led to the revision which we now have in our policies. Note the language and see how it flows directly from the debate over the earlier policy language.
"This insurance does not apply to: a. Expected or Intended Injury. 'Bodily injury' or 'property damage' expected or intended from the standpoint of the insured.'
Now that the "standpoint" issue was solved, one might think that the exclusion was fairly clear. Not on your life.
"Expected or Intended"
The first major interpretive issue under the "new" policy exclusion is whether the terms 'expected' and 'intended' were synonymous. Some courts concluded that they were, but most, making use of the 'plain meaning' approach to language--each word or phrase the legislature uses must be taken seriously-- concluded that the words were not synonymous. One court explained the difference as follows:
"Under this subjective test, an injury is 'intended from the standpoint of the insured' if the insured possessed the specific intent to cause bodily injury to another, whereas an injury is 'expected from the standpoint of the insured' if the insured subjectively possessed a high degree of certainty that bodily injury to another would result from the insured's act." Alabama Farm Bureau v. Dyer, 454 So2d 921 (Ala 1984).
The difference between the two is that intention focuses on the insured's desire, while expectation is concerned with anticipation of injury. I will deal with the notion of intent in the next essay. Here the focus is on "expected." Some other courts added to the subjective expectation of injury the notion that intent could be inferred from the circumstances when mental state of the insured was not clear.
In this regard, I think the MPC terminology of intentional, knowing, reckless and negligent is helpful to clarify the debate. An "intentional" act would never be covered by insurance, while a "negligent" act always would be (that is the purpose of insurance). "Expected" harm would fall somewhere in between the two, possibly closer to the definition of "knowledge" under the MPC. However, the word "expected" has a slippery slope to it. Insurers tend to want to argue that expectation suggests that if an insured should reasonably have expected that damage would have resulted in the natural course of things from the harm done, then there should be no coverage under this prong.
An Approach to "Expected"
Most courts, however, have been leery of importing a tort notion of reasonable foreseeability into the discussion of insurance coverage under the "expected harm" exclusion. Professor Abraham, our author, has tried to subdivide the term "expected" into three further categories for analytical purposes. He talks about the probability of harm, the awareness of the probability, and the specificity of the expectation of harm. Abraham concludes that a mere probability of harm, or even an awareness of this probability should not trigger the expected harm exclusion. Rather, he argues that an insured expects injury or damage when the resulting harm is of the same general type that the insured expected. Thus, it seems, he would require, and most courts agree at present, a fairly strong showing that the perpetrator of harm actually anticipated that the general type of harm that actually happened would occur. As you can see from this analysis, a lot of leeway is given to the courts.
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