Civil Crimes: the Effect of a Guilty Plea on an Insurance Policy's Criminal Act Exclusion
| Publication year | 2010 |
| Pages | 24 |
Vol. 23, No. 5, 24. Civil Crimes: The Effect of a Guilty Plea on an Insurance Policy's Criminal Act Exclusion
Volume 23 No. 5
Sep/Oct 2010
Almost all criminal defendants are offered plea bargains, which present defendants with the choice of taking a case to trial or pleading guilty to a reduced charge and a lighter sentence. Defendants almost never consider the civil consequences of pleading guilty to a crime. Even without these civil considerations, the decision to accept or reject a guilty plea can be agonizing. When it is factored in that the guilty plea could also cause a defendant to lose all of his worldly possessions in a civil lawsuit, the decision to plead guilty can be excruciating.
During my first year in practice, I worked as a public defender for the Salt Lake Legal Defender Association. Most of my clients decided to accept plea deals in order to avoid harsher sentences and a negative criminal record. I often wondered if my clients' decisions to plead guilty would cause them any serious civil consequences, perhaps even more serious than being convicted of a crime.
Not long after I joined the civil litigation firm where I now work, I was asked to prepare liability insurance coverage opinions. As I had some criminal experience, I was asked to advise insurers on whether a homeowner's liability insurance policy required coverage for an insured who had committed a criminal act or even pleaded guilty to a criminal charge. Exploring the insurance consequences of a criminal plea brought me closer to answering many of the questions I had as a criminal defense lawyer. In this article, I will try to explain why pleading guilty to a crime may, or may not, allow a homeowner's insurer to deny coverage.
The typical problem arises when a plaintiff files a civil lawsuit against a defendant for bodily injury or property damage resulting from a criminal act. In these cases, by the time the civil lawsuit has been filed, the defendant has probably already pleaded guilty to the criminal act that resulted in the plaintiff's damages. If the plaintiff at least alleges in the complaint that the defendant acted negligently, the incident will likely qualify as an "occurrence," covered by the defendant's homeowners policy. Because the complaint has alleged a covered occurrence, the insurer is legally obligated to at least defend the lawsuit on behalf of the insured defendant, even though the insured caused the injury by a completely intentional act.
A homeowner's policy insurer will certainly be questioning whether it will be required to defend and indemnify an insured who is being sued in negligence for a criminal act to which the insured pleaded guilty. Many people would think that an insurer is justified in being outraged about paying for an insured's criminal acts that were intended to cause injury. After all, homeowners insurance policies are intended to cover accidents, and an insured should not be allowed to benefit financially from intentionally harmful misconduct. In order for an insured to avoid paying for the insured's criminal act, an insurer will need to show that the policy's criminal act exclusion applies.
Most homeowners insurance policies contain an exclusion that precludes coverage for an intentional or criminal act. The analysis to determine whether the criminal act exclusion applies starts with the language of the exclusion. A common such exclusion is as follows: "Coverage is excluded for any bodily injuries which the insured intends or which is reasonably expected to result from the insured's criminal act."
The language of this exclusion makes it plain that not...
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