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3. CU-24-07

Form CU 24 07: Exclusion - Expected Or Intended Injury

1. What the form is

Form CU 24 07, "Exclusion - Expected Or Intended Injury," is an endorsement to the standard Commercial Umbrella Liability Coverage Form (CU 00 01). Its primary purpose is to reinforce or modify the existing exclusion within the umbrella policy concerning bodily injury or property damage that an insured person or entity expected or intended to happen. Essentially, it clarifies that the umbrella policy does not provide coverage for harm that was deliberately caused or could have been reasonably anticipated by the insured. However, this exclusion typically does not apply to "bodily injury" that results from the use of reasonable force to protect persons or property.

2. Classes of business it applies to

This endorsement is not specific to particular industries but rather applies broadly across any class of business that carries a Commercial Umbrella policy. The "Expected or Intended Injury" exclusion is a standard component of general liability and umbrella policies. Therefore, CU 24 07 could be relevant to a wide array of businesses, including but not limited to:

• Businesses with significant public interaction: Retail stores, restaurants, entertainment venues, and hospitality businesses where the potential for altercations or incidents leading to intentional injury claims might be higher. For example, if a bouncer at a nightclub intentionally uses excessive force and injures a patron, this exclusion (as modified or reinforced by CU 24 07) would likely be a key factor in determining coverage under the umbrella policy.
• Security services: Companies providing security guards or patrol services. If a security guard intentionally assaults someone while on duty, this endorsement would be pertinent.
• Any business where an employee might act intentionally to cause harm: While employers are generally not vicariously liable for intentional torts of employees that fall outside the scope of employment, this exclusion becomes relevant in situations where the act could be construed as "expected or intended" from the standpoint of the insured entity itself, perhaps due to negligent supervision or a pattern of similar incidents.

3. Special considerations

Several important considerations apply to the use and interpretation of Form CU 24 07:

• Relationship to Underlying Coverage: The Commercial Umbrella policy (CU 00 01) sits on top of primary liability policies, such as Commercial General Liability (CGL) and Auto Liability. The "Expected or Intended Injury" exclusion usually mirrors a similar exclusion in the underlying CGL policy. CU 24 07 ensures consistency or makes specific modifications to this exclusion at the umbrella level.
• "Expected or Intended" Standard: The interpretation of what constitutes "expected or intended" can be complex and may vary by jurisdiction. It generally implies that the insured acted with the knowledge that harm was substantially certain to occur, even if the specific harm that resulted was not precisely what was intended.
• Reasonable Force Exception: A critical aspect of this exclusion, often preserved or clarified by CU 24 07, is the exception for bodily injury resulting from the use of reasonable force to protect persons or property. What constitutes "reasonable force" is a factual determination that can depend heavily on the specific circumstances of an incident.
• Impact on Defense: Even if coverage for the injury itself is ultimately excluded, the umbrella insurer's duty to defend the insured against a suit alleging such injury might still be triggered, at least initially, depending on the allegations in the lawsuit and the specific wording of the policy and endorsement. However, the policy typically states that the right and duty to defend end when the applicable limit of insurance has been used up in the payment of judgments or settlements.
• Potential for Coverage Gaps: Misunderstanding or misapplication of this exclusion can lead to significant coverage gaps. It's crucial for both the insured and the insurance professionals to understand how this endorsement interacts with the main policy and any underlying coverage.

Real-world example: A business owner gets into a heated argument with a customer and intentionally shoves the customer, who falls and breaks their arm. The CGL policy would likely deny coverage based on the "Expected or Intended Injury" exclusion. If a Commercial Umbrella policy is in place, Form CU 24 07 would reinforce this denial at the umbrella level, meaning the umbrella policy would also not cover the damages or defense costs related to the customer's injury.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters will consider the nature of the insured's business and its potential for intentional acts when evaluating the risk. Businesses with a higher propensity for altercations or use-of-force scenarios (e.g., bars, security firms) may face more scrutiny. The presence of robust risk management practices, employee training on de-escalation techniques, and clear use-of-force policies can be mitigating factors.
• Pricing: While this specific endorsement might not have a direct premium charge associated with it (as it's often a standard clarification or reinforcement of an existing exclusion), the overall risk profile related to intentional acts can influence the umbrella policy's premium.
• Coverage Clarity: Agents should clearly explain the implications of the "Expected or Intended Injury" exclusion, as modified or reinforced by CU 24 07, to their clients. This includes discussing the "reasonable force" exception and the potential for uncovered claims if an act is deemed intentional.
• Underwriting Guidelines: Underwriters will review the insured's loss history for any prior incidents involving intentional acts. A pattern of such incidents could lead to declination or the imposition of more restrictive terms on the umbrella policy. They will also ensure that the underlying policies have a comparable exclusion.
• Interaction with other exclusions: It's important to consider how this exclusion interacts with others in the CU 00 01 form, such as those for contractual liability, liquor liability, or employer's liability, as multiple exclusions could potentially apply to a single claim.