Can an auto policy cover their insured when they intentionally ram someone else’s vehicle?

Question

Problem:

Alice is a policy holder for uninsured/under-insured motorist losses with insurer A; Bob has most likely no insurance coverage for intentional losses he caused at least not to property damages with insurer B.

Bob intentionally rams Alice’s vehicle on a public road; insurer B denies intentionality on behalf of Bob, and declines liability; however, not on the grounds that Bob is not covered for intentional losses.

Alice reports the matter to her insurer, and they assume liability, but once they receive the denial not based on lack of coverage, insurer A denies liability. Now the onus is on Alice to prove that Bob did not, in fact, not have coverage, and was “uninsured” by a reasonably clear standard.

This could be met by a showing that it would be illegal for insurer B to insure Bob since neither insurer A or Bob owes a duty to Alice to reveal their contract.

In fact, all laws in effect at the time of entering into the contract is, as if by reference, cited in the contract itself therefore, the public policy would, by the operation of law, void a provision that would allow such a coverage.

ADDITIONAL FACTS: Bob is bankrupt, and insurer B denies liability on alleged facts based on evidence it will not share absent a court order that which it interprets so as to conclude Alice is at fault instead of admitting on Bob's behalf a finding of intentional wrongdoing, and deny liability on the basis of lack of coverage.

Questions:

Is it against public policy to insure a motorist for intentional property damage caused by the insured with their vehicle to another’s property excluding covering any damage to the property of the insured?

Is it, in the State of California or is it prohibited by federal law? And if so, what laws or precedent prohibits it?

Primarily interested in the above jurisdictions, but any other would be interesting for comparison!

Answer 1

My findings so far are:

It does appear to be against public policy at least in California and Oregon.

In California outlawed statutorily — Ins. Code § 533 provides:

“An insurer is not liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence of the insured, or of the insured’s agents or others.”

Also on point is Civ. Code, § 1668:

“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law."

Affirmed, for e.g., in Tomerlin v. Canadian Indem. Co., 61 Cal.2d 638, 39 Cal. Rptr. 731, 394 P.2d 571 (Cal. 1964)

“[A]n insurer may not indemnify against liability caused by the insured's wilful wrong (Civ. Code, § 1668; Ins. Code, § 533; see, e.g., Abbott v. Western Nat. Indem. Co. (1958) 165 Cal.App.2d 302, 305 [ 331 P.2d 997])”

In Oregon, Outlawed by case law:

“Despite variations in the language of the policies, this court has interpreted various policy provisions excluding insurance coverage for intentionally-caused injuries similarly. [...] For an exclusion from insurance coverage for intentional conduct to apply, "[i]t is not sufficient that the insured's intentional, albeit unlawful, acts have resulted in unintended harm; the acts must have been committed for the purpose of inflicting the injury and harm before either a policy provision excluding intentional harm applies or the public policy against insurability attaches." [Citation.]” Ledford v. Gutoski, 319 Or. 397, 877 P.2d 80 (Or. 1994)

Answer 2

Probably, but the issue doesn't arise

No legitimate insurance company would offer such a policy because it exposes them to an almost certain loss: the only person who would want such a policy is a person who was planning to cause damage.

And since insurance is highly regulated in California, and everywhere else, legitimate insurers are all you get.

However, that just begs the question ...

For the scenario you present, Alice is not interested in Bob's arrangement with his insurer. Bob caused the damage to Alice's property (willfully or negligently), therefore, Bob has a liability to Alice. Whether Bob's insurer will indemnify Bob is a matter of complete indifference to her (as a matter of law - if the insurer accepts liability, things will be easier but the legal issues don't change).

Similarly, the refusal of Bob's insurer to assume liability does not affect whether Alice can claim on her insurance. Alice's insurer should cover her and seek recompense from Bob.

However, that just begs the other question ...

Is it against public policy to insure a motorist for intentional property damage caused by the insured with their vehicle to another’s property excluding covering any damage to the property of the insured?

Intentional damage to property can be a perfectly normal and legal thing to do. For example, builders intentionally damage buildings, utility companies intentionally damage roads and footpaths, rescue services intentionally damage property by cutting people out of cars. All of these people carry insurance that will respond if they are negligent and cause other damage but who pays for the damage otherwise is usually a matter of contract or statutory law.

However, I think you mean not just intentional but unlawful. If so, it's complicated.

Common law "public policy" and even statutory prohibitions like the one you quote in your answer from Claifornia are not clear-cut and depend on circumstances.

For example, imagine your car has stalled on a railway level crossing and the lights start to flash. I intentionally ram your car with mine pushing us both through the level crossing to safety. There is no doubt that I willfully caused damage to your property but I did not act unlawfully because I have the defence of necessity - plus, I'm a hero. Depending on the exact wording of the policy, I may or may not be covered by my insurance but if I were, an argument by the insurer that they were statutorily barred from paying is likely to fail.

Different jurisdictions fall on different sides of the "public interest" argument with some prohibiting such contracts, others allowing them and, others allowing indemnity for legal defences and damages but not state levied fines (e.g. in the case of directors and officers liability cover).

Answer 3

Is it against public policy to insure a motorist for intentional property damage caused by the insured with their vehicle to another’s property excluding covering any damage to the property of the insured?

Insurance companies are not permitted to indemnify their insured for their insured's intentional tortious acts.

But, if the loss is otherwise covered by the insurance policy of someone other than the person who committed the intentional act (e.g. an employer of Bob with its own insurance) and the person whose insurance policy covers the loss has an insurable interest (e.g. because they have potential liability as an employer for Bob's on the job acts), that wouldn't usually be barred by law or public policy (unless the employer directed Bob to take the intentional act).

Is it, in the State of California or is it prohibited by federal law? And if so, what laws or precedent prohibits it?

California law, although every U.S. jurisdiction has this rule rooted in English common law as other answers show.

Other

UIM insurance should cover Alice if Bob's insurer doesn't provide coverage due to an exclusion for intentional acts. But, UIM insurance only has a duty to pay if Bob lacks insurance, so his insurer's coverage decision is material to Alice's claim against her own insurer.

The insurance policies of both sides and the basis for Bob's insurer's denial of coverage should be disclosed in Alice's litigation with Bob suing for money damages.

Typically, Alice would file a declaratory judgment action against her own insurer, either separately or as a co-defendant in the action against Bob, to assure her that either Bob's insurance or her own, will cover the risk in a consistent manner. Often, the declaratory judgment action would be resolved by a stipulation based upon a special verdict in the suit against Bob determining if it is liable for battery or for mere negligence.

Typically, Bob's insurer would provide a defense to him subject to a reservation of rights (determined in a separate declaratory judgment action between Bob and his insurance company), notwithstanding its provisional denial of coverage, unless the evidence of his intent was unequivocally clear (e.g. a statement he made to his insurance company that his acts were intentional). The evidence provided to his insurance company that it used to deny his claim would be obtainable by discovery and admissible in Alice's lawsuit against Bob.

Also, even if Alice's UIM insurer did pay her right away, Alice would probably have to either sue Bob (subject to an insurance company lien at the insurance company's expense) or the insurance company would sue Bob for enforcement of its subrogation claim against Bob standing in Alice's shoes with cooperation from Alice that she would be contractually obligated to provide to her insurance company in that lawsuit (assuming in either case that Bob has some assets other than the insurance policy to pursue).