California Supreme Court Holds That Innocent Insured Is Not Subject to Intentional Act or Criminal Conduct Exclusion in Fire Insurance Policy


On February 17, 2011, the California Supreme Court held in Century-National Insurance Co. v. Jesus Garcia, et al., Case No. S179252, that an exclusion in a fire insurance policy excluding coverage for losses caused by the intentional act or criminal conduct of "any insured" impermissibly reduced coverage statutorily mandated by the Insurance Code provisions regulating fire insurance policies.

Plaintiffs Jesus Garcia Sr., and his wife, Theodora Garcia, (the "Garcias") suffered substantial damage to their home when their adult son set fire to his bedroom. Jesus Garcia Sr. was a named insured in an insurance policy issued by Century-National Insurance Company under which both his wife and his son also qualified as insureds. Century-National denied the Garcias' claim for fire damage on the ground that its policy contained an intentional acts exclusion, excluding coverage for the intentional acts or criminal conduct of "any insured." The trial court sustained Century-National's demurrer to the Garcias' complaint without leave to amend and the appellate court affirmed. The Supreme Court reversed.

The Supreme Court began its analysis by noting that all fire insurance policies in California are regulated by the Insurance Code. Pursuant to Insurance Code section 2070, "[a]ll fire policies . . . shall be on the standard form, and except as provided by this article shall not contain additions thereto. No part of the standard form shall be omitted therefrom except that any policy providing coverage against the peril of fire only, or in combination with coverage against other perils, need not comply with the provisions of the standard form of fire insurance policy . . . ; provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy."

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