Would umbrella policy or H/O's insurance cover this?

[browndl]

Got a question.....stick with me, its a bit odd.

Let's say two neighbors are constantly in conflict with each other.

• Neighbor A calls 911 on the other, making a false claim about something....let's say yardwork along a property line.
• This false claim results in the Neighbor B needing to retain a lawyer to defend a criminal complaint
• after working through the process, the criminal charges are dropped, dismissed against Neighbor B
• Neighbor B has $10k in legal fees...essentially damages caused by Neighbor A's actions.
• Neighbor B files a lawsuit against Neighbor A to try to recover damages.

Would this type of claim be covered by an insurance policy? I've read about the difference between negligent vs intentional behavior. Your thoughts? What if NeighborA's policy covers it, but it is later revealed that there was premeditated plan to cause this entire ordeal...what would happen to NeighborA and his insurance claim?

 

[bfastpool]

@browndl Read your policy. The liability section generally covers 2 things: an occurrence that results in damage to someone's property or an occurrence that results in damages due to bodily injury.

If a suit is brought because of a suit claiming property damage or bodily injury, your insurer would provide legal defense.

If a suit is brought because of a legal fee someone is suing you for, that's not property damage or bodily injury.

SECTION II – LIABILITY COVERAGES

A. Coverage E – Personal Liability
If a claim is made or a suit is brought against an
"insured" for damages because of "bodily injury" or
"property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages
   for which an "insured" is legally liable. Dam-
   ages include prejudgment interest awarded
   against an "insured"; and
2. Provide a defense at our expense by counsel
   of our choice, even if the suit is groundless,
   false or fraudulent. We may investigate and
   settle any claim or suit that we decide is ap-
   propriate. Our duty to settle or defend ends
   when our limit of liability for the "occurrence"
   has been exhausted by payment of a judgment
   or settlement.

 

[browndl]

@bfastpool good points...I would assume most all regular Home Owners Insurance policies read the same...."bodily injury" and "property damage"...not legal fees.

I'm curious what an Umbrella Policy would generally read? still just those two or does it expand to other liabilities?

And then there's the topic of intentional vs negligent.

 

[greg1234]

@browndl Let me ask you this question. What exactly has Neighbor B cited as a cause of action within their complaint?

Before you investigate whether the act is intentional or negligent act you have to see if the insuring agreement has even been met. The agreement usually notes that a insurer will indemnify and or defend a insured for any suit for claims of bodily injury or property damages as a accident. Since you reference a Umbrella policy it may have another type of damage like personal injury. The question comes down to if Neighbor B is claiming a damage that meets the definition of BI/PD/PI.

The likely outcome is seeking attorney fees pertaining to defense costs of a criminal matter is usually a economical damage that won’t meet either of those definitions of BI/PD/PI. That being said I am not aware of any viable cause of action that would address that specific damage for attorney fees since Neighbor A didn’t actually prosecute the case.

However let’s say that Neighbor B files a complaint for defamation then we have a potential damage that may meet the insuring agreement as depending on the insurer, it may define defamation as a personal injury damage. Then we would investigate to see if this was intentional vs negligent which is difficult to advise as each state defines and constitutes a intentional act through the insurance code or by case law. The only way to know if it was intentional is due to if the insured admits it or a jury rules on it. So if there is coverage it will be subject to a Reservation of Rights. A good example is the Johnny Depp v Amber Heard case. Her insurer paid a portion of her defense but, when the jury came out and ruled against her then her insurer attempted to recover their defense costs and denied paying any of the awarded damages because, it was confirmed by a court that she intentionally defamed him.

So to answer your question if Neighbor A insurer covers it only to find out it was intentional? My answer would be to look at Amber Heard as a reference.

 

[browndl]

@greg1234

specific damage for attorney fees since Neighbor A didn’t actually prosecute the case.

Good point, but the claim is that NeighborA's intentional, malicious actions (filing false police report, lying to investigators) resulted in criminal charges getting filed, thus causing legal fees to defend the criminal charge.

 

[akaya]

@browndl I was curious to see how chatGPT would respond:

Whether Neighbor B's legal fees and damages would be covered by insurance policy depends on the type of insurance policy Neighbor A has and the specific terms and conditions of that policy.

In general, homeowner's insurance policies may provide coverage for legal expenses and damages resulting from accidental or unintentional incidents. However, intentional acts may not be covered by insurance policies.

In this case, if it is found that Neighbor A's false claim was intentionally made to cause harm to Neighbor B, then it may be considered an intentional act and not covered by the insurance policy.

If Neighbor A's insurance policy initially covers the damages but it is later revealed that there was a premeditated plan to cause the ordeal, then the insurance company may deny the claim and seek reimbursement for any payments already made to Neighbor B.

If the insurance company denies the claim, Neighbor B may still have the option to pursue legal action against Neighbor A to recover the damages. However, this may be a more challenging case to prove, as it would require demonstrating that Neighbor A intentionally made the false claim with the intent to harm Neighbor B.