Are You Covered?: Coverage for Intentional Conduct and Related Claims Under a Commercial General Liability or Homeowner's Policy

By C. Stephen Stack, Jr.

Most Commercial General Liability (CGL) and homeowner’s policies provide coverage for bodily injury or property damage which occurs as a result of an "incident" or "occurrence". However, what constitutes an "incident" or "occurrence" is routinely the topic of litigation. Generally speaking, the term "incident" or "occurrence" is defined as "an accident which is unexpected or unintended from your standpoint resulting in bodily injury or property damage during the policy period." The purpose of limiting coverage to accidents is obvious. It is not economically feasible for insurance companies to provide coverage for an insured’s conduct that is either intentional or deliberate and providing coverage for such conduct is inconsistent with the purposes behind securing insurance.

In construing these limiting provisions, Mississippi appellate courts have repeatedly held that intentional conduct…conduct which is intended or expected by the insured…does not constitute an "accident" irrespective of whether unintended damages flowed from the act. See Allstate Ins. v. Moulton, 464 So. 2d 507, 510 (Miss. 1985); W.R. Berkley Corp. v. Rea's Country Lane Constr., 140 So. 3d 437, 443, (Miss. Ct. App. 2013).


Insureds and their attorneys oftentimes attempt to get around this exclusion from coverage by pleading negligence or some other non-intentional tort theory on the part of the insured. After a demand for a defense of such a lawsuit is made, insurance companies and their coverage counsel must decide whether any of the conduct alleged is arguably non-intentional and, thus, within the scope of coverage.

Mississippi has adopted the "allegations of the complaint" rule (sometimes referred to as the eight-corners test) to determine whether an insurer has a duty to defend its insured. Pursuant to this rule, the court reviews the allegations in the underlying complaint to see whether it states a claim that is either wholly within or arguably within the scope of the coverage provided by the insurance policy. This analysis involves a comparison between "the words of the complaint with the words of the policy, looking not to the particular legal theories pursued by the plaintiffs, but to the allegedly tortious conduct underlying the suit." Acceptance Ins. Co. v. Powe Timber Co., 403 F. Supp. 2d 552, 554 (S.D. Miss. 2005).


In other words, coverage is not automatically triggered simply because a complaint uses the term "negligence" or states a claim which merely appears to be in the realm of premises liability or some other non-intentional tort theory. See Allstate Ins. Co. v. Perkins, 2008 U.S. Dist. LEXIS 72130, *13, 2008 WL 4283648 (N.D. Miss. 2008) (Insurer not obligated to defend or indemnify simply because the operative complaint contains a premises liability claim); Foreman v. Continental Cas. Co., 770 F.2d 487, 489 (5th Cir. 1985) (explaining that "a reference to negligence does not override the exclusion").

A more problematic question arises when the complaint alleges negligent conduct on the part of an insured in relation to otherwise intentional conduct. This oftentimes arises when an allegation of negligent supervision or entrustment as to the individual who committed the intentional acts is included in the complaint (e.g., negligence on the part of a parent or employer).


Although no Mississippi state appellate courts have addressed whether such claims are covered, federal courts in Mississippi making an Erie guess as to how the Mississippi Supreme Court would rule have consistently held that "an occurrence-based policy provides no coverage to any third party for claims related to and interdependent on intentional conduct." See, e.g., Acadia Ins. Co. v. Pearl River Cmty. Coll., 2017 U.S. Dist. LEXIS 23835, *13, 2017 WL 690551 (S.D. Miss. Feb. 21, 2017); Employers Mutual Casualty Co. v. Raddin, 2012 U.S. Dist. LEXIS 44649, 2012 WL 1098624 (S.D. Miss. 2012). This is true even where claims of negligent entrustment, negligent supervision, and failure to train are made or where there is an alleged failure to warn of a minor’s propensity for harmful conduct. Id.; see also Am. Nat'l Gen. Ins. Co. v. Ryan, 274 F.3d 319, 325 (5th Cir. 2001).


Of course, each case will present a unique set of facts that must be considered on a case-by-case basis. Likewise, making a determination as to the nature of conduct based solely upon the words included in a complaint can be treacherous. If an insurance company denies coverage based upon this exclusion, it is faced with the prospect of having to defend a lawsuit alleging bad faith on its part, whether it ultimately prevails or not. For this reason, in all but the most clear-cut cases, the company will most likely defend under a reservation of rights and seek a declaratory judgment that it has no duty to provide a defense to the lawsuit. This protects both the insured’s and the company’s rights and ultimately provides a definitive answer as to coverage.