Do General Liability Policies Cover Intentional as Well as Unintentional Acts?

Aug 30, 2018

In some instances intentional acts are covered.

General liability insurance policies provide that the insurer will defend and, if necessary, indemnify accidental, or negligent, acts but do not cover intentional acts that harm third parties.

But can the intentional acts of a contractor’s employee be considered an “occurrence” that an insurer must defend and indemnify pursuant to the contract language of a policy?

The California Supreme Court addressed this issue in Liberty Surplus Insurance Corporation v. Ledesma &Myer Construction Co., Cal. Sup. Ct., Case No. S236765 (June 4, 2018). Garet Murai discusses this case in the California Construction Law Blog. He prefaces his remarks by noting that the facts of this case are very unpleasant.

Ledesma & Myer Construction was hired “by the San Bernardino Unified School “District to manage a construction project at a middle school.” An assistant superintendent on the project was accused of molesting a 13 year old girl who was a student at the school. “She sued [him] in state court alleging that he had sexually abused her. She also sued Ledesma on a claim for negligent hiring, retention and supervision.”

Ledesma referred the case to its insurance carrier, Liberty Surplus Insurance, “which issued a reservation of rights while at the same time filing a declaratory relief action in federal court contending that it had no duty to defend or indemnify Ledesma” because “while the policy provided coverage for ‘bodily injury’ caused by an ‘occurrence,’ the term ‘occurrence’ was defined as an ‘accident’, and Hecht’s [the assistant superintendent] actions were not an accident but intentional.”

The case eventually reached the California Supreme Court. It decided that the policy provided coverage for Ledesma, not its employee. Although the actions of Hecht were intentional, the actions of Ledesma in hiring and failing to supervise its employee were negligent. Therefore, “’as matter of public policy,…there is no overriding policy reason why a person injured by sexual abuse should be denied compensation for the harm from insurance coverage purchased by the negligent facilitator.’”


Supreme Court Finds Insurance Coverage for Intentional (and Despicable) Act of Contractor’s Employee, Garett Murai, California Construction Law Blog, July 16, 2018