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Insurance – Homeowner Policy – Duty To Defend – Sexual Molestation – Notice Of ‘Occurrence’

An Alexandria U.S. District Court says a couple has no coverage under a homeowners’ policy against claims that their two sons sexually molested their female cousin years earlier, a claim for which the homeowners failed to notify the carrier until the cousin’s family filed suit five years after the homeowners learned of the accusations.
Nationwide Mutual Fire Ins. Co. v. Overstreet (USDC-ED) (VLW 008-3-277) (21 pp.)

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  1. Footnote 13 gives me pause in this opinion. On the issue that the insureds should have notified the carrier even if they believed no meritorious claim could be brought against them, the footnote cites multiple actions which apparently had failed. At the end of the footnote, Judge Ellis concludes: “The fact that many such claims do not succeed does not count against the notion that a person of ordinary intelligence and prudence should nonetheless anticipate that these claims may be brought.”
    This seems to me to be an unreasonable burden on an insured. In its essence, an insured is to anticipate that anything occurring on their property which some innovative person might craft into a lawsuit creates a duty on the insured to notify the carrier. I believe that statement to be too broad, and in the context of the suit and its results, dicta.

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