Academic journal article Journal of Risk and Insurance

Liquor Liability JUA V. Hermitage Insurance Company

Academic journal article Journal of Risk and Insurance

Liquor Liability JUA V. Hermitage Insurance Company

Article excerpt

The Liquor Liability Joint Underwriting Association (JUA) is a nonprofit association created by the Massachusetts legislature to provide liquor legal liability insurance to sellers of alcohol who are unable to obtain liability insurance in the private market. Lamplighter, Inc., a business licensed to serve alcohol, purchased an insurance policy with the JUA providing coverage for negligence in the distribution, sale, or serving of alcoholic beverages. Lamplighter also purchased a special multiple peril policy from Hermitage that provided coverage for liability due to bodily injury and property damage. An endorsement to the policy stated that "assault and/or battery shall not be deemed an accident under the policy." Lamplighter believed that coverage was provided for damages arising from fights among its patrons and that it would not have purchased the policy if it had known that such coverage was not provided.

A Lamplighter patron was injured and filed suit against Lamplighter. In Count I of the complaint, the plaintiff alleged that the assailant had been negligently served alcoholic beverages by Lamplighter. In Count II of the complaint, the plaintiff alleged that Lamplighter had negligently failed to provide adequate security.

Hermitage indicated that it had no liability because, even though Count II of the complaint alleged failure to provide adequate security, Hermitage took the position that the assault and battery endorsement would preclude coverage. The JUA undertook Lamplighter's entire defense. The trial proceeded, and the plaintiff was awarded in excess of $80,000. The JUA settled for $90,000 including costs and obtained from the plaintiff a general release. The JUA, pursuant to the subrogation clause in its policy, brought suit against Hermitage for declaratory relief.

The court found that the assault and battery endorsement in the special multiple peril policy did not exclude coverage for a claim alleging negligent failure to supply security and that the insurer was liable for the entire settlement and prejudgment interest, which began to accrue when the JUA paid the settlement. …

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