1. By you or at your direction; and
2. With the intent to cause a loss.
This exclusion applies regardless of
whether you are actually charged with or
convicted of a crime.
In the event of such loss, no one defined as you or your is entitled to coverage, even people defined as you or your
who did not commit or conspire to commit the act causing the loss.
The policy defined “you and your” as
the persons named in the declarations
and other residents including a spouse or
any other person under the age of 21 in
the care of these individuals.
The Standard Fire Policy provided the
following limitations on coverage:
This Company shall not be liable
for loss by fire or other perils insured
against in this policy caused, directly
or indirectly by: (a) enemy attack by
armed forces, including action taken by
military, naval or air forces in resisting
an actual or an immediately impending
enemy attack; (b) invasion; (c) insurrec-
tion; (d) rebellion; (e) revolution; (f) civil
war; (g) usurped power; (h) order of any
civil authority except acts of destruction
at the time of and for the purpose of pre-
venting the spread of fire, provided that
such fire did not originate from any of
the perils excluded by this policy; (i) ne-
glect of the insured to use all reasonable
means to save and preserve the property
at and after a loss, or when the property
is endangered by fire in neighboring
premises; (j) nor shall this Company be
liable for loss by theft.
The conditions that suspended insur-
ance coverage included losses occurring:
(a) While the hazard is increased by
any means within the control or
knowledge of the insured; or
(b) While a described building, whether
intended for occupancy by owner or
tenant, is vacant or unoccupied be-
yond a period of sixty consecutive
days; or
(c) As a result of explosion or riot, un-
less fire ensues, and in that event for
loss by fire only.
The Seventh Circuit’s Decision
The circuit court affirmed. In its decision,
the Seventh Circuit found that the coverage provided by the Metropolitan policy
failed to conform to that required by the
Standard Fire Policy. Under the Metropolitan policy, the circuit court said, an
intentional loss caused by any insured
party suspended coverage for all insured
parties – even those who were innocent
of any wrongdoing. By contrast, the circuit court explained, the Standard Fire
Policy suspended coverage if the hazard
was “increased by any means within the
control or knowledge of the insured.”
(Emphasis added.)
The Seventh Circuit pointed out that
the term “the insured” was not defined
in the Standard Fire Policy. It then rea-
soned that the inclusion of the word
“the” as opposed to “an” served “as a
limitation.” If one insured party com-
mitted an intentional harm but an-
other insured party was innocent of
any wrongdoing, then the insurance
coverage was suspended “only as to the
insured who caused the loss.” An “inno-
cent” coinsured still could recover, the
circuit court declared.
Accordingly, the circuit court ruled,
under the Illinois Standard Fire Policy,
Wesley Streit Jr.’s intentional act of arson
suspended insurance coverage only as to
him and his parents could recover. Any
attempt by Metropolitan to proscribe
their recovery was “invalid and unlawful.”
The case is Streit v. Metropolitan Casualty Cas. Ins. Co., No. 16-3203 (7th Cir.
July 17, 2017).
Steven A. Meyerowitz, Esq., (smeyerowitz@
meyerowitzcommunications.com) is the
director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law
Report, and the founder and president of
Meyerowitz Communications Inc.
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