(Article from Insurance Law Alert, April 2018)
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Last month’s Alert reported on a Ninth Circuit decision holding that an intentional act cannot be considered an accident for insurance coverage purposes, regardless of the policyholder’s reasonable subjective beliefs. See Crown Tree Serv. v. Atain Specialty Ins. Co., 2018 WL 1042673 (9th Cir. Feb. 26, 2018). In a recent decision, the Idaho Supreme Court followed suit, ruling that an intentional act by a non-insured third party is not a covered occurrence even if the incident was unexpected from the policyholder’s perspective. Farm Bureau Mutual Ins. Co. v. Cook, 2018 WL 1547109 (Idaho Mar. 30, 2018).
The Cooks owned a cabin situated on 200 acres of property in Idaho. They allowed Michael Chisholm to stay in the cabin in exchange for maintaining the property. While residing at the cabin, Chisholm shot a visitor to the property. The victim sued Chisholm, the Cooks and Farm Bureau, the Cooks’ property insurer. Farm Bureau argued that it had no duty to defend or indemnify the Cooks for the shooting because it was not a covered occurrence under the policy. An Idaho district court agreed and granted Farm Bureau’s summary judgment motion. The Idaho Supreme Court affirmed.
The Idaho Supreme Court ruled that the shooting could not be considered an occurrence because it was an intentional act, rejecting the Cooks’ contention that from their perspective, it was an unexpected event. The court explained that for purposes of an occurrence determination, the focus is on the injury-causing event (here, the shooting) rather than the insureds’ alleged negligence. The court noted that although some jurisdictions employ a “standpoint of the insured” analysis, Idaho follows a “nature of the event” test under which an intentional shooting cannot be considered an accident, regardless of the insureds’ subjective expectations.