10.1.1 Accidental Conduct

• Jurisdiction: Arizona

Intentional acts exclusions are part of every commercial general liability (CGL) policy and homeowner's policy. Arizona's Financial Responsibility Act authorizes the use of this type of exclusion in automobile liability policies. A.R.S. Sec. 28-1170(E) provides, in relevant part, "the motor vehicle liability policy need not insure . . . liability for damage to property or bodily injury caused intentionally by or at the direction of the insured." Notwithstanding the above-referenced statutory authorization, a significant number of insurance companies do not have intentional act exclusions within their automobile liability policies.

Standard CGL and homeowner's policies exclude coverage for intentional wrongdoing in two ways. First, the scope of coverage granted by the policy's insurance agreement is limited to accidental misconduct, and coverage for intentional acts is, therefore, eliminated in the first instance. Second, coverage is typically limited to bodily injury or property damage that is "neither expected nor intended from the standpoint of the insured." The latter restriction is typically accomplished through an exclusion.

Liability coverage in standard CGL and homeowner's policies is triggered by an occurrence. Those policies utilizing an occurrence trigger routinely define the term "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

Generally, courts have experienced difficulty in determining what constitutes an accident in this context. This difficulty is reflected by the numerous decisions in other jurisdictions that have reached varying results from similar fact situations.^[1]

The term "accident" contains an element of fortuity, which focuses on something different than the intentional character of the damages.^[2] The unexpected, in essence, is the heart of the fortuity requirement. The Arizona courts have generally construed the term "accident" to mean an "undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force . . . ."^[3] Applying this definition, they have rejected an expansive application of the accident concept.

A case illustrative of the general recognition of this concept is United States Fidelity & Guaranty v. Advance Roofing & Supply Co.,^[4] where the court of appeals held that a claim for faulty workmanship was not an occurrence within USF&G's policy definition. After recognizing...