In a case out of Illinois,1 an issue was raised regarding the exclusion for intentional conduct when a fire was started at a home.
Metropolitan Casualty Insurance Company issued a homeowners policy to the Streits for their home in Illinois. During the policy period, a fire damaged the home and it was uninhabitable. The Streit’s son admitted to starting the fire, pled guilty to criminal charges and went to prison. At the time of the fire, he lived at home with his parents. The Streits submitted a claim to the insurance company. The policy stated:
4. Under SECTION 1 – LOSSES WE DO NOT COVER:
A. item 1. Intentional Loss exclusion is delete and replaced by Intentional
Loss, meaning any loss arising out of any intentional or criminal act committed:
1. by you or at your direction; and
2. with the intent to cause a loss. This exclusion applies regardless of whether you are actually charged with or convicted of a crime. In the event of such loss, no one defined as you or your is entitled to coverage, even people defined as you or your who did not commit or conspire to commit the act causing the loss. However, this exclusion will not apply to deny payment to an innocent co-insured who did not cooperate in or contribute to the creation of the loss if:
i. such loss arose out of a pattern of criminal domestic violence; and
ii. the perpetrator of the loss is criminally prosecuted for the act causing the loss.
If we pay a claim pursuant to the above, our payment to the insured person is limited to that person’s insurable interest in the property less any payments we first make to a mortgagee or other party with a legal secured interest in the property. In no event will we pay more than the Limit of Liability. (Dkt. 11, Def. L.R. 56.1(b)(3) Responses to Pl. Statements of Fact at ¶11).
The Metropolitan policy defined “you” and “your” as:
[T]he person or persons named in the Declarations and if a resident of the same household:
A. the spouse of such person or persons;
B. the relatives of either; or
C. any other person under the age of twenty-one in the care of any of the above. (Dkt. 8, Pl. L.R. 56.1(a) Statements of Fact at ¶12).
The insurance company denied the claim because the fire was set by a resident relative of the household and was excluded.
The Streits argued that their policy conflicted with the Illinois Standard Fire Policy, so the fire loss should be covered.
The Standard Policy states in relevant part:
This Company shall not be liable for loss by fire or other perils insured against in this policy caused, directly or indirectly by: (a) enemy attack by armed forces, including action taken by military, naval or air forces in resisting an actual or an immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) usurped power; (h) order of any civil authority except acts of destruction at the time of and for the purpose of preventing the spread of fire, provided that such fire did not originate from any of the perils excluded by this policy; (i) neglect of the insured to use all reasonable means to save and preserve the property at and after a loss, or when the property is endangered by fire in neighboring premises; (j) nor shall this Company be liable for loss by theft.
The court found that since the Insurance Code has rules and regulations regarding policies that have the force of statute, all Illinois fire insurance policies must be consistent with the standard policy. Thus, in this case, Metropolitan may not provide less coverage.
If a fire policy conflicts with the Standard Fire Policy, the Standard Fire Policy controls.2 However, the insurance company argued for a different result when there is an intentional act.
The court found the Lundquist3 ruling persuasive. In Lundquist, a fire caused by vandalism was not an “other peril” for which the defendant insurance company could create an exclusion consistent with the Standard Policy.4 The Standard Policy did not exclude coverage for fires caused by vandalism and thus losses from such fires were covered.5 The policy at issue must conform to the Standard Fire Policy. It does not exclude intentional conduct, thus it must be covered. The intentional conduct provision in the underlying policy is void and may not be used to deny the Streit’s claim if they are innocent co-insureds. There was a question of fact relative to the role the Streits had in their son setting the house on fire, so the court did not award summary judgment.
While intentional acts are usually excluded, there are some exceptions. This case illustrates the same and hopefully also inspires you to keep fighting for what you think is right.
1 Streit v. Metropolitan Cas. Ins. Co., No. 15-cv-2461, 2015 WL 6736677 (N.D. Ill. Nov. 4, 2015).
2 See Lundquist v. Allstate Ins. Co., 314 Ill. App. 3d 240, 245, 732 N.E.2d 627, 247 Ill. Dec. 572 (2d Dist. 2000).
4 Lundquist, 314 Ill.App.3d at 244.
5 Id. at 245.