Recently, Merlin Law Group attorney Paul LaSalle wrote this article:

Is Mental Incapacity Defense Available to Insureds to Defeat the Intentional-Loss Exclusion?

In my book When Words Collide: Resolving Insurance Coverage and Claims Disputes, I tell the following story in a segment discussing intentional loss exclusions:

Another issue is whether or not the alleged tortfeasor had the mental acuity or cognitive faculties to form intent. For example, the Minnesota Supreme Court has applied a “cognitive and volitional” standard of intent whereby an insured must understand the nature and wrongfulness of an act and be able to control his or her actions before the exclusion may be enforced.

If I could share another personal experience, a number of years ago, a relative of mine who suffered a mental impairment due to contracting Legionnaire’s Disease did not take his medications for several days. As a result, he came under a delusion that the FBI and CIA had a covert outpost in his next-door neighbor’s home and were spying on him. In order to, according to him, “put the fear of God into them” that he was not someone to be trifled with, he took a pistol (which his wife had no idea he owned) and fired six shots through the front door of this neighbor’s house. Fortunately, no one was at home and injured, but there was property damage and allegedly mental trauma by the residents.

The neighbor retained an attorney who filed a lawsuit against my relative. His wife presented the papers to their insurer and the adjuster denied the claim, citing their homeowners policy’s intentional loss exclusion. I became involved after his wife retained her own lawyer, someone who knew nothing about insurance and was lost. To make a long story short, we were able, using several of the approaches addressed in this book, to convince the insurer’s claims department that their insured arguably lacked the mental capacity to form intent. At a minimum, they owed a defense and, since this was a “friendly” lawsuit for insurance money, were able to quickly settle the claim for a few thousand dollars.

In my monthly Insurance Journal column, I write about “language and logic” and “forms and facts.” Intentional loss exclusions are not necessarily absolute. Their applicability depends on the facts and circumstances of each claim that have to be logically weighed in the context of the policy form language.

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information