PERSONAL INJURY LIABILITY COVERAGE EXCLUSIONS

As noted, many homeowners policies also include personal injury liability coverage. Under the ISO HO 3 policy, if an insured wishes to add personal injury coverage, it is added by an endorsement. In policies that include personal injury coverage within the basic policy form, the personal injury exclusions are intermingled with the bodily injury and property damage exclusions. The ISO personal injury endorsement’s insuring agreement contains the same duties to defend and indemnify as does the bodily injury and property damage insuring agreement. Some of the personal injury exclusions are substantially similar to several of the bodily injury and property damage exclusions. The personal injury exclusions are as follows, in the order in which they appear. Intentional Acts This exclusion precludes coverage for personal injury caused by or at the direction of an insured with knowledge the act would violate the rights of another and would inflict personal injury. Knowledge of Falsity This exclusion precludes coverage for personal injury arising out of oral or written publication of material, if done by or at the direction of an insured, with knowledge of its falsity. This is a specific example in the context of cov126 The Complete Book of Insurance erage for libel, slander, product disparagement, or invasion of privacy of conduct that also would be precluded under the expected or intended exclusion applicable to the bodily injury or property damage coverages. Prior Publication This exclusion precludes coverage for personal injury arising out of the oral or written publication of material whose first publication takes place before the policy. The prior publication exclusion is another one that applies to the defamation offenses and privacy violation offenses. It recognizes that the same defamatory material or material that invades a person’s right of privacy may be published several times. It provides, consistent with the personal injury insuring agreement, that coverage applies only to offenses that are first committed while the policy is in effect. The law that determines whether a publication during the policy period, which contains material published prior to the policy period but varies in some way from the previous publication, is a sufficient basis to trigger the coverage and avoid the application of the first publication exclusion, varies state by state. This is a highly factually dependent inquiry in which the outcome will vary from case to case. Criminal Acts This exclusion precludes coverage for personal injury arising out of criminal acts committed by or at the direction of an insured. In the context of the applicable personal injury coverage offenses, this exclusion is more likely to be applicable to the false imprisonment, wrongful entry, or eviction categories of personal injury offenses than it is to the defamation categories of personal injury offenses. Contractual Liability This exclusion is largely the same as the second part of the bodily injury and property damage contractual liability exclusion. Liability Coverage Exclusions 127 Employment Related This exclusion precludes coverage for personal injury sustained by a person as the result of an offense directly or indirectly related to the employment of that person by an insured. This is an example in which there is an attempt to keep the boundaries of personal liability and business liability clear and separate. Business Activities This exclusion is substantially identical to the bodily injury and property damage business exclusion and needs no further explanation. Compensated Civic or Public Activities This exclusion precludes coverage for personal injury arising out of public or civic activities by an insured for which the insured receives pay. This is a liability exposure that should be covered by the insurer of the governmental or other body for which an insured performs civic or public activities, such as a homeowners association. Personal Injury to Insureds This exclusion is essentially identical to the bodily injury to insureds exclusion of the bodily injury and property damage coverages. Pollution This exclusion precludes personal injury coverage arising out of the actual, alleged, or threatened discharge of pollutants. It contains an insurance industry standard definition of pollutants. This exclusion is included in the personal injury endorsement because common theories of liability asserted in pollution lawsuits by adjoining or nearby landowners or by governmental bodies include nuisance and trespass. These claims can at times fall into the wrongful entry group of personal injury offenses, depending on how those defenses are defined. 128 The Complete Book of Insurance Pollution Remediation Expense This precludes personal injury coverage for the costs arising out of requests, demands, or orders that an insured test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, or in any way respond to or assess the effects of the pollutants. The best way to distinguish between the prior exclusion and this exclusion is that the prior exclusion is aimed at damages claims, whereas this exclusion is aimed at the costs and expenses of complying with federal and state pollution remediation statutes. The latter costs and expenses are sometimes characterized as not constituting damages. For example, an adjoining landowner can sue you for damage to his property caused by your release of pollutants. Such a suit would be the subject of the personal injury pollution exclusion. Under federal and state environmental statutes, environmental regulatory bodies can issue administrative orders requiring you to test for, monitor, and remediate pollutants and pollution. The pollution remediation expense exclusion would apply to these sorts of claims. Governmental Pollution Damages Claims Alternately, the environmental regulatory bodies can perform the testing, monitoring, and remediation of pollutants and then sue you to recover the costs of having done so as damages. This variation on the personal injury pollution exclusions is aimed at governmental damages claims in the form of reimbursement for their costs of testing, monitoring, or remediating pollutants. EXCLUSIONS ADDED BY OTHER INSURERS Exclusions applicable to the liability and medical payments coverages do not vary widely from insurer to insurer. Some insurers include exclusions for punitive or exemplary damages. In most, but not all, states, punitive damages are not insurable as a matter of law, although there are a few states where there is no such public policy. In those states, if insurers wish to avoid coverage for punitive damages, a specific exclusion for such damages needs to be included. Liability Coverage Exclusions 129 Some homeowners insurers exclude coverage for claims or suits arising out of the sale or transfer of real property. Such exclusions are intended to make clear that liability coverage does not exist, for example, if an insured is alleged to have concealed the existence of defects or damage from the buyer when the insured sells his or her home.

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