Ninth Circuit: Day Care Endorsement In Policy Does Not Cover Molestation By Homeowner

The molestation of a girl at a home day care center was an excluded intentional act of an insured, the U.S. Ninth Circuit Court of Appeals ruled in Farmer v. Allstate Ins. Co., 2006 WL 620899 (March 14, 2006). The molester, who was convicted and sentenced to six years in prison, was apparently the husband of the woman who ran the day care center. The husband and wife were both listed as “insureds” under the terms of a homeowners’ policy with a home day care center endorsement. The policy also contained an intentional acts exclusion that precluded coverage for damage or injury intentionally caused by an insured. In almost every jurisdiction, courts hold that all damages resulting from sexual abuse are intended by the criminal, even if he did not form a mental intent to cause the specific harm that resulted.
In this case, the victim’s guardian sued the day care provider, and received an assignment of indemnity rights under the policy, the probable reason being that the day care owner was judgment proof. Therefore, the lawsuit decided by the Ninth Circuit was made directly by the victim’s guardian, although the same coverage analysis applied, because the insurance company’s contract was with the day care center owner, not the victim.

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