Academic journal article Journal of Risk and Insurance

Arson Exclusion Violated Statute and Public Policy When Applied to Innocent Coinsured. (Recent Court Decisions)

Academic journal article Journal of Risk and Insurance

Arson Exclusion Violated Statute and Public Policy When Applied to Innocent Coinsured. (Recent Court Decisions)

Article excerpt

Lane v. Security Mutual Insurance Co., 96 N.Y2d 1,747 N.E.2d 1270, 724 N.YS.2d 670 (New York Court of Appeals--February 13, 2001)

Security Mutual issued a homeowner's policy to Joretta Lane that contained an exclusion for losses arising out of an intentional fire set by an "insured." The term included not only the named insured but also relatives living at home.

While the policy was in effect, the plaintiff's 17-year-old son intentionally set the premises on fire. Although the plaintiff's son was solely responsible for the arson, the defendant disclaimed liability based on the policy exclusion for intentional acts by "an insured."

747 N.E.2d at 1271.

The court of Appeals, New York's highest court, held the exclusion unenforceable as against Lane, who had nothing to do with her son's arson activity.

We hold that the subject exclusion impermissibility restricts the coverage mandated by statute and afforded the innocent insured. The New York standard fire insurance policy is codified in [New York] Insurance Law [section]3404(e). Any policy that insures against the peril of fire must incorporate "terms and provisions no less favorable to the insured than those contained in the standard policy." The standard policy exclusion provision entitled "Conditions suspending or restricting insurance" states that damages will be disclaimed "for loss occurring *** while the hazard is increased by any means within the control or knowledge of the insured. …

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