Commercial general liability (CGL) policies cover occurrences. The recent versions of the Insurance Services Office, Inc. (ISO), CGL coverage form define "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
The definition of "occurrence" formerly included the phrase "which is neither expected nor intended from the standpoint of the insured." Upon deletion of that language from the definition of occurrence, an exclusion was added eliminating coverage for "'[b]odily injury' or 'property damage' expected or intended from the standpoint of any insured."
General liability policies do not provide coverage for harm caused intentionally by the insured according to the policy language and the states' public policies against permitting such insurance. However, in most cases, the insured must actually intend to cause harm, absent an intentional or criminal act exclusion in the policy. See e.g., State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072 (Fla. 1998) (undefined term "accident" encompasses not only accidental events but also injuries or damage neither expected nor intended from the standpoint of the insured).
Courts generally treat whether the insured intends to cause harm as a subjective matter (to which the insured can typically respond, "But I didn't mean to!"). However, courts differ about how to analyze whether an insured subjectively expects to cause harm.
CGL Policies Do Not Define "Expected"
Courts give terms left undefined in insurance policies their plain and ordinary meaning. Whittaker Corp. v. American Nuclear Insurers, WL 4342512, 3 (D. Mass. 2009) (words in an insurance policy are construed in their usual ordinary sense) (citation omitted).
Courts will also look at surrounding policy language when determining how to construe undefined insurance policy terms. In recent CGL policies, the policy separates the terms intended and expected by the conjunction "or." The word "or" is, by its nature, disjunctive and, when used in a statute or rule, normally indicates that alternatives were intended. United States v. Garcia, 718 F.2d 1528 (11th Cir. 1983), aff'd, 469 U.S. 70 (1984). See also Judicial Watch, Inc. v. State, 892 A.2d 191 (Vt. 2005) (applying the normal rules of construction, the use of the word "or" suggests alternative and distinct items).1
The courts in Florida, for example, have recognized that words separated by the word "or" are intended to have different meanings. See Osceola County School Bd. v. Arace, 884 So. 2d 1003, 1005 (Fla. 1st Dist. Ct. App. 2004). In Sparkman v. McClure, 498 So. 2d 892, 895 (Fla. 1986), the Supreme Court of Florida noted that the word "or" is generally construed in the disjunctive when used in a statute or rule. The court had to determine whether the phrase "written or recorded order of denial" meant that, to trigger the running of the speedy trial period, the order denying discharge need not be "written" so long as it was otherwise "recorded." Id. The Supreme Court based its decision on the fact that the use of the word "or" between "written" and "recorded" required the court to consider each word in its own right.
The word "or" is normally disjunctive "and establishes a relationship of contrast." Parrish v. District of Columbia, 718 A.2d 133, 136 (D.C. 1998). Despite this, only a few courts have addressed whether an insured expected the harm, even if unintended, and some recognize no distinction between the terms. See e.g., Grange Mut. Cas. Co. v. Thomas, 301 So. 2d 158, 159 (Fla. Dist. Ct. App. 1978) (finding "no difference in substance between the language of the exclusionary provision here and that in the policies limiting the exclusion simply to 'intentional' injuries").
Those courts that do recognize a distinction appear to only agree that expected injury involves a lesser standard of the certainty of a harmful outcome than the standard used for intended injury.
The Plain Meaning of Expected
The Supreme Court of Illinois recognized that unless the terms "intended" or "expected" had different meanings, there would be no point in having both terms within the exclusion. Bay State Ins. Co. v. Wilson, 451 N.E.2d 880, 882 (Ill. 1983). See also Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998) (Texas courts attempt to give effect to the policy as written and disfavor discarding policy terms as redundant or mere surplusage); see also Galli v. Metz, 973 F.2d 145, 149 (2d Cir. 1992) (applying N.Y. law) and Klapp v. United Ins. Group Agency, Inc., 663 N.W.2d 447, 453 (Mich. 2003).
"Expected" is not typically defined in the insurance contract. Accordingly, this word taken on its ordinary meaning. The definition of "expect" in Black's Law Dictionary is "'to await; to look forward to something intended, promised, or likely to happen." State Farm Lloyd's v. Jones, 2008 WL 5424093, 3 (E.D. Tex. 2008). Similarly:
Merriam-Webster defines "expect" as follows: "2. to anticipate or look forward to the coming or occurrence of ... 4a. to consider probable or certain."
The Jones court opined that these dictionary definitions indicate that "expect" can have a pair of distinct, unambiguous meanings:
One meaning involves the anticipation that a particular result will occur. The other meaning involves the appreciation that a result is more likely to occur than not to occur.
The Jones court explained that using the dictionary definition of "expect" as:
waiting for a result, particularly one that is "intended" or "certain" to occur would be to interpret "expected" to mean "intended."
Jones, supra at 3.
Therefore, the court determined that:
a result ... is "expected" ... if the insured considered its occurrence to be more likely to happen than not to happen.
A greater degree of proof is required to establish intent than to establish expectation. ... Injuries which are of such a nature that they should have been reasonably anticipated by the insured are "expected" injuries.
Wilson, supra, at 882 (citations omitted).
Recklessness Does Not Necessarily Mean Expectation
Jones deals with a civil wrongful death action which took place after the insured was criminally charged with manslaughter. A jury convicted the insured of manslaughter. Under Texas law, manslaughter was defined as an act that recklessly causes the death of an individual. The criminal jury was further instructed that:
A person ... is reckless ... when she is aware of but consciously disregards a substantial and unjustifiable risk that the circumstances exist or the result will occur ... [the risk must be such that] its disregard constitutes gross deviation from the standard of care that an ordinary person would exercise under all the circumstances as viewed from the actor's standpoint.
Jones at 1.
State Farm argued that the jury's finding of recklessness triggered the expected or intended exclusion on the face of the wrongful death complaint. The court previously held that a finding of recklessness did not equate to intended. Thus, at issue in this decision was whether recklessness equaled expected as a matter of law. The court held that whether the insured expected the result (considered the occurrence of the result likely) was a question of fact for the jury.
In determining that the issue could not be decided as a matter of law, the court explained that:
The actor may, however, understand the substantial and unjustifiable risk and disregard it, thus acting recklessly, without considering the resulting consequences to be probable. In such a case, the exclusionary language is not implicated.
Id. at 4.
The court also recognized that "[a]t some point, the insured's belief in the probability of an outcome crosses from expectation to intent" but in jurisdictions that recognize a separate standard for expect, the distinction is irrelevant as both trigger the application of the exclusion. Jones at 3.
The Wilson facts are similar to Jones, except that in the Wilson coverage action:
The parties stipulated that Johnson intentionally shot the defendant with a reckless and wanton belief that he was acting in self-defense (self-defense was not raised in connection with the criminal proceedings against Johnson).
Wilson at 881.
To the Illinois Supreme Court, there was no fact question for the jury:
Johnson, in being consciously aware that defendant's injuries were practically certain to be caused by his conduct, must have reasonably anticipated or "expected" the injuries which resulted.
Wilson at 883.
The Wilson court found that the insurer properly denied coverage because the injuries in this case were "an intended and expected result of an intentional act [and not ...] the unintended result of an intentional act." Wilson at 882.
In Wilson, the insured's recklessness was sufficient for the court to determine that coverage was precluded because the insured expected harm to result from his conduct. Jones held that although the insured was criminally reckless, whether the insured expected the result under a liability insurance policy was a fact question.
In PSI Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705, 728 (Ind. App. 2004), the Indiana court found that:
Even if the evidence demonstrates a [reckless] disregard for safety, such evidence is not enough to warrant exclusion under either the lesser "expected injuries" standard or the greater "intended injuries" standard.
A Two-Part Test to Determine Expectation
Jenkins v. Koester, 2007 WL 2429846, 2 (Mich. App. 2007) applied a subjective standard and two-part test for determining whether an injury is expected. "Expected" refers to the "foreseeable, expected, or anticipated" nature of the harm, and:
In the absence of explicit instructions in the policy itself, the standard is essentially subjective, but tempered by a determination of whether the insured's subjective expectations are so absurd and unrealistic that they cannot possibly be taken seriously.
Koester at 2.
In Koester, the insured-defendant shot the plaintiff with a paintball gun, causing a severe eye injury. In determining whether the exclusion applied, the court engaged a two-part analysis.
First, did the insured actually foresee, expect, or anticipate that plaintiff would sustain an eye injury? Second, was the eye injury so overwhelmingly and obviously likely to occur under the circumstances that the insured's claims that he did not foresee, expect, or anticipate the eye injury fly in the face of all reason, common sense, and experience?
Koester at 4.
The Koester court, just like those in Texas and Illinois, explained that expected and intended are not synonyms. "Expected injury" means "that the injury was the natural, foreseeable, expected, and anticipatory result of an intentional act." Koester at 3 (citing State Farm Fire & Cas. Co v. Jenkins, 382 N.W.2d 796 (Mich App. 1985)).
Although the Koester standard relies on the subjective expectations of the insured, "courts do not necessarily merely take the insured's word for it." Koester at 3. While the test is subjective:
There may be circumstances under which an individual's protestation that he or she did not think the injury would result is simply so ridiculous that it cannot be given credence. This is merely a matter of using objective evidence to help determine a party's subjective mental state.
In Koester, the court found that the exclusion did not apply because the insured did not "actually expect that he would cause plaintiff any injury, let alone a permanent eye injury" particularly where the facts revealed that the plaintiff's eyes were not in the line of fire and plaintiff was wearing a helmet. Id. at 4 (emphasis in original). In light of the facts, the court found that coverage was not excluded. Neither part of the two-prong test was satisfied because:
Koester's failure to anticipate, expect, or foresee an eye injury to plaintiff is not so unrealistic that it "flies in the face of all reason, common sense, and experience."
Delaware courts also apply a two-part inquiry to the application of the exclusion, but the inquiry differs from the Michigan analysis. Under Delaware law:
Where the tortfeasor clearly lacks the intent to inflict any damage or injury, and it is not foreseeable that damage or injury will occur, the exclusion will not apply.
Intended denotes that the actor desire[d] to cause the consequences of his act or believes that consequences are substantially certain to result from it. Walls at 5 (citation omitted). However, an injury is expected "if the actor knew or should have known there was a substantial probability that a certain result would take place but more than a "reasonable foreseeability" is required.
While some courts disagree, the policy language clearly uses two different terms so that expected injury and intended injury are two different things. There is little dispute as to the meaning of intended injury; there appears to be no consensus as to what expected injury means.
The cases above define expected injury as injury that is "more likely than not to occur," "reasonably anticipated," "practically certain," and "substantially probable." Courts have not analyzed whether or under what circumstances a subjectively certain expectation of some definite probability of an adverse outcome (and the degree of adversity) may in some situations fall within the policy exclusion for expected injury. The only apparent commonality is that the insured's subjective expectations govern the interpretation "unless [of course] the insured's subjective expectations are so absurd and unrealistic that they cannot possibly be taken seriously." Koester at 3.
Contributing author Rebecca C. Appelbaum is a senior associate practicing in the area of third-party coverage at the firm of Butler Pappas Weihmuller Katz Craig, LLP.
1 In certain instances, typically to effectuate legislative intent or avoid a construction of the statute which would defeat the evident purpose of legislation, "the conjunctive 'or' is held equivalent to the copulative conjunction 'and.'" See e.g., Suddath Van Lines, Inc. v. State, Dept. of Envtl. Prot., 668 So. 2d 209, 212 (Fla. 1st Dist. Ct. App. 1996) (citing Dotty v. State, 197 So. 2d 315, 318 (Fla. 4th DCA 1967)).
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI.
Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion.
If such advice is needed, consult with your attorney, accountant, or other qualified adviser.