California Insurance Code section 533 provides that an insurer is not liable for a loss caused by the willful act of an insured. This is consistent with California’s public policy of denying coverage for intentional acts of wrongdoing. However, when there is more than one insured, this policy can lead to inequitable results. Case in point is the situation presented in Century National Insurance Company v. Garcia, 2011 Cal. LEXIS 1392 (decided February 17, 2011).

In Century, Jesus Garcia, Sr.’s home was damaged when his adult son intentionally started a fire in his bedroom. Garcia Sr. subsequently submitted a claim under his homeowner’s insurance policy issued by Century National Insurance Company (“Century”). Although Garcia was the named insured, his wife and son also qualified as an insured under the policy. Century denied the claim on the grounds that the damage was caused by an intentional wrongful act by an insured. Garcia challenged the denial arguing that the Insurance Code does not bar “innocent insureds” from recovering despite a co-insured’s wrongful acts. At trial, the state court granted Century’s demurrer and Garcia appealed.