1. WISCONSIN INDEPENDENT AGENT DECEMBER 201120
Some agents and company personnel
think if there is no abuse or molestation
exclusion, assault and battery claims
must be covered. Otherwise, why
have an exclusion at all? This train
of thought is not all correct. First, let’s
get an understanding about what assault
and battery is.
WHAT IS ASSAULT? Common law defines
assault in this way:
Any unlawful offer or attempt to injure
another with the apparent present ability to
effectuate the attempt under circumstances
creating a fear of imminent peril.
More simply, this means one person
threatens use of force against another.
Examples would be holding up a fist or
a bat at someone and threatening them
with harm.
WHAT IS BATTERY? Common law defines
battery as “intended, offensive bodily
contact with another.” Simply, battery is
the use of force against another resulting
in harmful or offensive contact. Examples
would be hitting a person with a bat or fists.
In order to find out where coverage is
today, you sometimes have to trace the
history of the coverage and the policy
forms.
The 1941, 1947 and 1955 liability policies
actually define assault and battery:
Assault and Battery shall be deemed an
accident unless committed by or at the
direction of the insured.
With the 1966 and 1973 liability policies,
coverage was based on an occurrence, rather
than an accident basis. We lost the definition
of assault and battery. Whether these later
policies made an exception for assault
and battery was vague. Normally, assault
and battery coverage got caught up in the
definition of an occurrence, which read:
“Occurrence” means an accident, including
continuous or repeated exposure to
conditions, which results in bodily injury
or property damage neither expected
nor intended from the standpoint of the
insured.
When the 1976 and 1981 broad form CGL
endorsement was made available, one of
the extensions of coverage was extended
bodily injury coverage, which stated:
The definition of occurrence includes any
intentional act by or at the direction of
the insured which results in bodily injury,
if such injury arises solely from the use
of reasonable force for the purpose of
protecting persons or property.
This was intended to clarify that if the
assault and battery were not intentional
but inflicted for purposes of defense, there
would be coverage. The coverage might
have been available with the earlier 1966
and 1973 policies, but this endorsement
clarified the intent.
The 1986 and subsequent policies,
including the latest 2007 edition, deal
with assault and battery matter under
exclusions:
This insurance does not apply to: Expected
or Intended Injury … 2a. “Bodily Injury” or
“Property Damage” expected or intended
from the standpoint of the insured. This
exclusion does not apply to “Bodily Injury”
resulting from the use of reasonable force
to protect persons or property.
So while modern day liability policies do
not specifically mention the words assault
and battery, they still deal with them. What
does that mean to your customer?
SCENARIO #1 — Standard liability policy,
no endorsement adding coverage, no
abuse or molestation exclusion restricting
coverage, exclusion #2a wording similar
to 1986, and current policy forms as noted
above.
First, we go to the insuring agreement,
which reads as follows:
We will pay those sums that the
insured becomes legally obligated
to pay as damages because of “bodily
injury” or “property damage” to which
this insurance applies.
Bodily injury is defined as bodily injury,
sickness or disease sustained by a person,
including death resulting from any of these
at any time.
Then, we look at exclusions:
This insurance does not apply to: Expected
or Intended Injury … 2a. “Bodily Injury” or
“Property Damage” expected or intended
from the standpoint of the insured. This
exclusion does not apply to “Bodily Injury”
resulting from the use of reasonable force
to protect persons or property.
In reviewing the insuring agreement, one
important fact is that not all assault and
battery claims will be considered bodily
injury. Claims such as offensive touching
without actual injury, assault (without
physical contact), negligent employment,
negligent supervision, and negligent
design or control of premises might leave
the insured with no coverage, not even
defense.
If you get over the insuring agreement,
you still run into the expected or intended
injury exclusion. If the assault and battery
allegations are considered bodily injury,
your insured will hopefully get defense
from the carrier until the claim and
allegation can be proven to have been
expected or intended, or until it can be
proven that the insured used more than
reasonable force to protect his or her
property.
The insured will have coverage for bodily
injury resulting from the use of reasonable
force to protect persons or property, but
outside of this sliver of coverage, the
insured will only have defense because the
duty to defend is broader than the duty
to indemnify. Some say this is coverage;
I say it’s better than having the abuse or
molestation exclusion, but not by much.
U N D E R STA N D I N G
ASSAU LT A N D BAT T E RY
SCENARIO #2 — Standard liability policy,
with abuse or molestation exclusion.
The abuse or molestation exclusion applies
to bodily injury and property damage
liability, and personal and advertising
injury liability in the CGL. It reads:
This insurance does not apply to “bodily
injury,” “property damage” or “personal and
advertising injury” arising out of: 1. The actual
or threatened abuse or molestation by anyone
of any person while in the care, custody or
control of any insured, or 2. The negligent: a.
employment; b. investigation; c. supervision;
d. reporting to the proper authorities, or
failure to so report; or e. retention of a person
for whom any insured is or ever was legally
responsible and whose conduct would be
excluded by paragraph 1, above.
The insurance carrier tells everyone the
claim is not covered, and the claim file is
closed. You have a carrier that has a broad
exclusion and wants to use it. If the insured
wants to find defense for a claim, it may be
impossible and will certainly be trying.
Most surplus lines (non-admitted) CGL
carriers are using this exclusion, but
surprisingly only a few admitted carriers
are putting the exclusion on everything
they write, while the remaining carriers
use the exclusion selectively, depending
on class code. This exclusion is bad in the
sense that it means your insured is going to
have to fight to even get defense against an
assault or battery claim.
There are carriers willing to write a CGL
policy without this exclusion. Agents need
to realize which carriers are using this
exclusion and better serve their clients by
placing the business with a carrier that
doesn’t include this exclusion on its policy
form. Without the exclusion, you have a
slim chance at coverage and better chance
at defense. With the exclusion, you have
little hope for anything but a quick letter of
declination.
SCENARIO #3 — Standard liability
coverage, with additional sexual or physical
abuse or molestation coverage.
ISO doesn’t have a specific endorsement or
coverage form adding assault and battery
coverage, so you find many manuscript
forms. The insured pays additional
premium, and the insurance carrier
provides more coverage by adding sexual or
physical abuse or molestation coverage to
the policy.
When this coverage is added, the insured
normally gets three very important grants
of coverage. First, the carrier broadens the
insuring agreement. Second, the definition
of bodily injury is broadened. Third, the
expected or intended exclusion is removed.
Let’s have a look the new insuring
agreement:
We will pay those sums that the insured
is legally obligated to pay as “damages”
because of “bodily injury” to which this
insurance applies, if the insured is alleged
to be liable for another person’s “abusive
conduct” by reason of: (1) the negligent: (a)
employment; (b) selection; (c) investigation;
(d) supervision; (e) reporting to the proper
authorities, or failure to so report; or (f)
retention of any “employee,” volunteer or
any other person or persons for whom the
insured is or ever was legally responsible;
or (2) the negligent: (a) design; (b) control;
(c) maintenance period; (d) supervision;
(e) inspection; or (f) investigation of
prospective tenants of your premises,
premises you control or premises you have
leased to another; or (3) the negligent
failure to provide professional services or
neglect of the therapeutic needs of a client,
patient or other person because of the
“abusive conduct.”
The carrier is broadening coverage, opening
the door for the insured to find valuable
coverage (not just defense). The insurance
carrier now says it will pay up to the limit
of insurance for claims where bodily injury
has occurred and the insured is alleged to be
liable for another person’s abusive conduct
by reasons that are common in today’s legal
environment. Abusive conduct is a newly
defined term, which helps find coverage:
“Abusive Conduct” is each, every and
all actual, threatened or alleged acts
of physical abuse, sexual abuse, sexual
molestation or sexual misconduct.
The definition of bodily injury has been
broadened to mean bodily injury, sickness
or disease including emotional stress or
anguish, including death resulting there
from. In broadening the definition, we
make it easier to find coverage because now
claims for emotional stress and anguish
are covered, where assault claims without
bodily injury were previously uncovered.
Lastly, the expected or intended injury
exclusion is gone. The insurance carrier is
no longer going to deny the claim because
the action was
expected or intended.
With these three
different coverage
scenarios, you have
options to present
to your insureds.
Buying coverage is
the best solution.
Those that don’t buy
coverage should find
a policy without the
abuse or molestation
exclusion attached to
it. The least desirable
option would be
a policy with the
abuse or molestation
exclusion.
> Tim Wahl is the
commercial sales manager
for Gallaher Insurance
Group in Mexico,
Missouri. He is also a
member of the Missouri
Association of Insurance
Agents’ Technical
Committee. This article
was originally published
in the November
2011 issue of Missouri
Agent, reprinted with
permission.
ISO doesn’t have a
specific endorsement
or coverage form
adding assault and
battery coverage,
so you find many
manuscript forms.
When reviewing commercial general liability declaration
pages, agents will run down the exclusions list to see
what is not covered. Sometimes, they will find an abuse or
molestation exclusion; sometimes they won’t.
WISCONSIN INDEPENDENT AGENTDECEMBER 2011 21