What you don’t know can hurt you: an exclusion clause for failure to prevent an assault may exclude coverage for negligently failing to prevent assault without having any direct knowledge the assault was going to occur

Insurance law – Homeowner’s insurance – Duty to defend – Interpretation of policy – Exclusions – Assault – Failure to supervise – Practice – Summary judgments

Reeves v. Co-Operators General Insurance Co., [2022] B.C.J. No. 2499, 2022 BCSC 2258, British Columbia Supreme Court, December 23, 2022, C.L. Forth J.

The insureds’ son, Isaac, was alleged to have assaulted a classmate at school.  The classmate started a civil action and named the insureds as defendants (the “Underlying Action”).  The classmate alleged that the insureds had negligently supervised Isaac.  The insureds sought a defence from their insurer on their homeowner’s policy.  The insurer denied coverage and sought to have the coverage issue determined by way of summary trial.

The policy included an exclusion for claims made against an insured arising from or in relation to failure of any insured to take steps to prevent physical abuse or assault (the “Exclusion”).  The insurer argued that the Failure to Prevent Exclusion applied and that there was no duty to defend the insureds in the Underlying Action.

The insureds argued the phrase “failure to take steps” in the Exclusion clause ought to be interpreted as a lay person would understand it, as a failure to take any steps whatsoever.  The insureds argued taking action requires knowledge, such that the Exclusion should only be applied to failures to act with knowledge of harm.  They argued that, for example, if they saw their son about to kick another student and did nothing, then the policy would not cover a claim against them.

The Court held the insureds sought to read in a requirement of knowledge about an event that was about to occur that was not present in the clause.  The Court held the reference to “failure to take steps” was clear and unambiguous, and the insureds’ interpretation would not give effect to the words of the exclusion clause.  The policy also included an exclusion for physical abuse or assault committed with the knowledge of any insured.  The Court held the requirement for knowledge the insureds sought to read in would render the Exclusion clause redundant.  The Court found that the Exclusion applied and the insureds’ action for coverage was dismissed.

This case was digested by Mollie A. Clark, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.  If you would like to discuss this case further, please contact Mollie A. Clark at [email protected].

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