Northern Security Insurance Company, Inc. v. Susan Durenleau Stanhope, Jesse Durenleau, Helene Parah, and Augustin Parah, Jr.

Summary

The Vermont Supreme Court affirmed a judgment holding that Northern Security Insurance Company owed coverage under a homeowners policy for claims arising from sexual abuse committed by a minor. The court upheld application of the innocent co-insured doctrine, placed the burden on the insurer to prove that injuries were intended or expected, and held that the policy exclusion requires a subjective standard. The court also rejected the insurer's challenge to the trial court's handling of rebuttal argument.

Holdings

1. Under the innocent co-insured doctrine, a material misrepresentation by one insured does not void coverage for other insureds who were unaware of the misrepresentation when the policy applies separately to each insured.
2. Once an insured makes a prima facie showing of coverage by producing evidence of harm, the insurer bears the burden of proving that the harm was intended or expected under the policy exclusion.
3. The expected-or-intended injury exclusion is governed by a subjective standard: the insured must subjectively desire the injury or be subjectively aware that injury is substantially certain to result.
4. The trial court did not commit reversible error by directing the jury to disregard Northern's challenged rebuttal comment because Northern was permitted to argue that intent could be inferred from all relevant facts and circumstances, and the jury instructions accurately stated the governing standard.

Questions Presented

1. Whether Rose Perron's material misrepresentation in the insurance application voided coverage for innocent co-insureds Steven and Kyle.
2. Whether the insurer bore the burden of proving that the alleged injuries were intended or expected under the policy exclusion.
3. Whether the intentional-harm exclusion required a subjective rather than an objective standard for determining whether Kyle intended or expected injury.
4. Whether the trial court improperly restricted Northern's rebuttal argument or otherwise misled the jury regarding the evidence relevant to Kyle's intent.

Disposition

affirmed