N.J. Court: Sexual Assault Liability Exclusion Can Depend on Age

April 3, 2007

A New Jersey appeals court recently ruled that while an insurer is freed from providing liability coverage when an insured commits sexual assault on a young child, the insurer could have an obligation when the insured attacker is a minor.

Three years ago a 13-year-old boy sexually assaulted a younger girl who was staying in his home. The victim’s family sued the attacker’s parents who owned the New Brunswick home, which was insured by Shelby Mutual Insurance Co.

Shelby Mutual sought a declaration that it was not obligated to provide liability coverage under the homeowner’s insurance policy it issued to the parents of the 13 year-old minor. Shelby cited what is known as the inferred intent rule, which assumes that the adult knew the victim would suffer injury. The policy contains an exclusion from liability coverage for bodily injury “which is expected or intended by one or more ‘insureds’ even if the ‘bodily injury’ . . . is of a different kind, quality or degree than expected or intended.”

Shelby lost in lower court and appealed. On March 26, a three-judge panel in the Appellate Division decided that the inferred intent rule, which preclude as a matter of law insurance coverage for a sexual assault committed by an adult against a young child, does not automatically apply as a matter of law when the sexual assault is committed by a minor under 14 years of age. Instead, the panel ruled, a factual determination must be made on a “case by case basis to determine the attacker’s subjective intent.”

Writing for the court, Judge Joseph Lisa explained why age must be considered when weighing insurance coverage:

“We take no issue with the proposition that sexual molestation of a young child is inherently harmful. But for that harm to be excluded from coverage the wrongdoer must intend or expect to cause it. In our view, insistence on universal application of the inferred intent rule, without regard to the age of the wrongdoer, substitutes arbitrariness for fidelity to the rationale underlying the rule. At some point, at some age, for some young wrongdoers, there is nothing left to commend the rule except to say that it is the rule.”

The court acknowledged the public policy concern of not wanting to encourage such conduct but said providing insurance proceeds to an innocent victim was also a public policy matter to be weighed.

“Our holding does no violence to the insurance contract. If, indeed, J.T. subjectively intended or expected to cause harm to P.G., coverage will be precluded. If, however, he did not intend or expect to cause such harm, any resulting harm would have been “accidental” within the meaning of the policy terms, thus obligating Shelby to provide the coverage required by its policy,” the opinion concluded.

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