Liability insurance policies provide insurance coverage only for accidental events and not for personal injury or property damage caused by an intentional act of their insured. To that end, insurance carriers generally include language in their policies providing coverage only if damages are caused by an “occurrence”. The term “occurrence” is generally defined as an “accident”.
On July 13, 2013, the Wisconsin Supreme Court rendered a decision which helps clarify, and arguably narrows, the definition of “occurrence”. See Schinner v. Gundrum, 833 N.W.2d 685 (2013). In Schinner, Gundrum, who was an insured of West Bend Insurance Company, hosted an underage drinking party. After becoming intoxicated, one of Gundrum’s guests assaulted and seriously injured another guest. Gundrum knew that the assaulting guest had a tendency to become belligerent when he was intoxicated, but Gundrum permitted that guest to drink anyway. The victim ultimately sued Gundrum and West Bend to recover damages for his injuries.
At the trial court level, West Bend disputed coverage arguing that it had no duty to defend or indemnify Gundrum because Gundrum’s actions as a party host were intentional. Therefore, it was argued, no “accident” or “occurrence” under the West Bend homeowner’s policy existed to trigger coverage. The Circuit Court agreed and granted summary judgment in favor of West Bend concluding that there was no “occurrence” when an insured intentionally procures alcohol for an underage drinking party.
The Wisconsin Court of Appeals, however, reversed the trial court and concluded that since the assault of the plaintiff was not intended by Gundrum, the personal injury was caused by an “occurrence”. The Court of Appeals thus held that since the injury to the victim was not intentional, coverage was triggered.
West Bend thereafter appealed the Court of Appeal’s Decision to the Wisconsin Supreme Court where the primary question before the Court was whether plaintiff’s injuries resulted from an “occurrence”. In reversing the Decision of the Court of Appeals, the Supreme Court first concluded that the homeowner’s actions in setting up an isolated shed for a drinking party, procuring alcohol and expecting others to bring alcohol, inviting underage guests to the party, and encouraging the underage guests to drink, were all intentional actions that violated the law. The Court further held that these intentional actions were all a substantial factor in causing the plaintiff’s bodily injury. Viewed from the standpoint of a reasonable insured, the Court concluded that these intentional actions all created a direct risk of harm resulting in bodily injury, notwithstanding the lack of intent by the homeowner to cause any specific injury. Thus, the Court held that the plaintiff’s injury was not caused by an “occurrence” within the meaning of the West Bend policy. West Bend was, therefore, not obligated to provide insurance coverage for their insured.
Under this Decision, the Court has concluded that it is an insured’s intent to act in light of foreseeable harm rather than an insured’s subjective intention or expectation of injury that controls the “occurrence” analysis in Wisconsin. This Decision is certainly favorable for insurers who may now attempt to utilize this restrictive definition of “occurrence” to possibly avoid coverage even when it is clear that the insured did not intend to cause harm to the plaintiff.
As this recent case law demonstrates, insurers must be aware of how courts will define “occurrence” and analyze the actions of their insurers to determine coverage. For additional analysis of the Schinner Decision or to further discuss any coverage issue, feel free to contact Doug Lehrer at firstname.lastname@example.org.