(3)Could the insurer deny coverage based on the “expected or intended” exclusion?

(4) Could the insurer consider this a business venture and deny coverage?

Ohio Subscriber

There are no simple answers to your questions. In one jurisdiction the court found that taking in foster children was a business, but it can be argued that the insured is really doing no more than recouping expenses. The current ISO homeowners policy would probably hold that if the insured made no more than $2,000 total compensation, taking in foster children would not be a business. Reimbursement of expenses is not compensation, so the insured could net $2,000 and not have the situation considered a business.

But we see two potential problem areas. By definition, persons under 21 and in the care of the insured or a household relative qualify as insureds. So, if one intentionally caused a loss, there could be a problem with the intentional loss exclusion being invoked. Then, it would be up to a court to determine if the person was capable of forming an intent (the same would apply if the foster child injured someone else). In the case of an adult, the person would not meet the definition of insured, so presumably a fire caused by this person would be covered. And, since the adult is not an insured, the question of the insured's liability responding to cover the adult in event of the adult's injuring someone becomes moot. The insured could be sued, though, perhaps under the theory of negligent supervision of the adult, and the policy should respond.

You would also want to consider that if the foster child were injured while in the insured's care, the homeowners policy might not provide coverage because bodily injury to an insured is generally excluded, depending upon the jurisdiction.

The best place to seek coverage for the insured is from the organization placing the individuals, but these policies usually only provide liability coverage for the insured, and not first party property coverage.