No Coverage for Innocent Insureds: West Virginia Supreme Court Decision Proves the Smallest Words Continue to Have Huge Impacts on Coverage

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The distinction between the terms “the insured” and “any insured” in an insurance policy is a critical one and continues to spark coverage litigation. This distinction was key to the Supreme Court of Appeals of West Virginia’s recent decision denying coverage to parents sued in a wrongful death action arising from murder committed by their minor children. Answering certified questions from the federal court, the court held that the parents’ homeowners policies did not provide coverage because exclusions barring coverage for claims arising out of intentional or criminal acts by “any insured” applied to the claims against the parents negligent supervision of their children.

Two minor girls and their mothers were sued for the wrongful death of a third minor, whom the two girls had murdered. The girls confessed to the killing and were convicted. In the wrongful death action, the parents sought coverage for negligent supervision claims against them under their respective homeowners’ policies. The daughters who committed the criminal acts were insureds under the policies. Both policies contained exclusions that precluded coverage for injuries expected or intended by “any” insured and for injuries arising out of a criminal act committed by “any” insured. Both policies also contained “separation of insureds” or severability clauses stating that coverage under the policies applied separately to each insured.

The court held that unlike the use of the phrase “the insured” in a policy exclusion, the use of the word “any” does not restrict application of the exclusion to the particular insured seeking coverage — in this case, the mothers — even when the policy also contains a severability clause. The use of the word “any” negates coverage for all potential insureds if “any” one of them committed the excluded act. The court rejected the insureds’ argument that the severability clause creates an ambiguity when interpreted together with the language of the exclusions.

Courts in some jurisdictions have held that a severability clause creates ambiguity in exclusions that preclude coverage for the intentional or criminal acts of “any insured” and that this ambiguity must be resolved in favor of coverage. However, this is the minority rule. The holding of the West Virginia Supreme Court of Appeals in favor of the insurers aligns West Virginia with the majority of jurisdictions on this issue.

The case is American Nat’l Prop. & Cas. Co. v. Clendenen, No. 16-0290, 2016 W. Va. LEXIS 891 (Nov. 17, 2016).