Nebraska Subscriber

Your question highlights a personal lines coverage gap that there is no way of closing. Yes, negligent supervision is not excluded, but the cause of loss in the situation you describe is the bodily injury to the daughter, which is excluded. It is the event without which the counterclaim would not exist.

However, to give a more complete answer, we must determine if the daughter is an insured. She is related to the named insured, her father, by marriage, blood, or adoption. The next question is whether she is a resident of her father's household. This is a question of fact, not of contract. For example, in a shared custody arrangement, it may be that the daughter is a resident of two households—her mother's or her father's—depending upon who has custody at the time of the incident. For convenience we assume she is a resident of her father's household, and thus an insured on his homeowners policy.

At least three courts have addressed this type of claim, all with similar results. First, Knoblock v. Prudential Property and Casualty Insurance Co., 615 A.2d 644 (N. J. App. Ct. 1992). The insureds' son was injured while at the home of his aunt and uncle when he fell from a minibike. The insureds sued, alleging the aunt and uncle had negligently allowed him to ride the bike. When the aunt and uncle filed a third-party action against the insureds, the homeowners insurer denied coverage, and this action resulted. The court said “the policy plainly does 'not cover bodily injury to … any insured.' In a personal injury action, indemnity claims of someone only vicariously liable and contribution claims of a joint tortfeasor are derived solely from the 'bodily injury' claim of the injured person. Where that bodily injury is allegedly sustained by 'any insured,' the exclusion withdraws coverage.”

The court in Kalus v. Merrimack Mutual Fire Insurance Co., 1996 Mass. Super. LEXIS 78 looked to this language with approval when finding there was no coverage for an insured. The insured and his wife were installing a refrigerator and the wife was injured. She sued the manufacturer and distributor; they in turn filed third party complaints against the husband claiming contribution based on his negligence.

The husband sought a declaration that the insurer had a duty to defend against third party claims. The husband also asserted that the severability of insurance clause should allow coverage. But the court agreed with the finding of Knoblock, and added that the “narrowly tailored household member exclusion clause … would be rendered meaningless by an apparently conflicting severability clause.” The clause did not obligate the insurer to defend the husband.

Finally, a situation very similar to that you describe produced the same results as the preceding two cases. A grandfather, resident of the insureds' household, took his granddaughter to a restaurant that had a child's play area. The granddaughter injured her arm on the equipment, and the parents sued the restaurant, the equipment manufacturer, and others, one of whom filed a third-party complaint against the grandfather. The insurer refused to defend based on the household exclusion.

The insureds asserted: 1) that the exclusion was invalid because a similar exclusion in an auto policy was against public policy; 2) the exclusion violated public policy expressed in case law rejecting the doctrines of inter-spousal and parental immunity; and 3) the exclusion deprived the parents of defense they could not afford to pay for and that they thought they had purchased. Nonetheless, the court found for the insurer. The exclusion was valid and did not violate public policy. The court found that “case law abrogating intrafamily tort immunity does not establish a separate public policy sufficient to override a household exclusion in a homeowner's insurance policy,” and “the household exclusion … excludes insurance proceeds as a source of recovery when the insured has purchased a policy with such an exclusion.” This case is Salviejo v. State Farm Fire and Casualty Co. et al., 958 P.2d 552 (Haw. App. 1998).

The insurer in your situation was correct in denying coverage. It is interesting to note that the ISO 2000 homeowners forms have added the following to the bodily injury to an insured exclusion: “This exclusion also applies to any claim made or suit brought against you or an 'insured'… to repay or share damages with … another person who may be obligated to pay damages because of 'bodily injury' to an 'insured'.”