The Wacky World of Collision and Comprehensive Coverages: Intentional Injury and Illegal Activity Exclusions

The objective of this article is to develop an appropriate analytical basis for evaluating the illegal activity exclusion in the context of automobile comprehensive coverage. Because the illegal activity exclusion has not been the subject of any reported decision in the context of comprehensive coverage, this article attempts to achieve its goal by examining intentional injury and prohibitive use exclusions in the context of automobile liability and collision coverages, respectively. The purpose of this examination is to ascertain whether the analytical tools employed in the liability and collision coverages arenas are appropriate in the context of the primary thesis. Part II of this article details the most significant provisions of automobile insurance contracts. This part, though primarily introductory in nature, reflects the skepticism with which courts view attempts by insurers to limit coverage in general. Part II explores the intentional injury exclusion in the context of automobile liability insurance. This part attempts to identify the methodologies used by courts in assessing the validity of the exclusion. Part II demonstrates how public policy influences the manner in which courts construe the intentional injury exclusion, and concludes that the analytical standards used to determine the validity of such exclusions reflect the policy concerns inherent in mandatory automobile liability insurance. Part III examines prohibitive use restrictions contained in car rental agreements. Part III explores the relationship between collision damage waivers, prohibitive use provisions, and collision insurance policies in general. This part demonstrates that the validity of prohibitive use provisions contained in rental car agreements, though not technically insurance contracts, is determined according to general principles of insurance contract interpretation. Part III also details the analytical standards used by courts to assess the validity of prohibitive use restrictions. Parts IV and V document the relationship between collision and comprehensive coverages. They also examine the collision and comprehensive coverages insuring agreement. This insuring agreement affords coverage only for direct and accidental loss. The primary thesis emanates out of the difficulty of formulating a universal all-inclusive definition of the term accidental. Parts IV and V discuss the general rule that accidental for purposes of collision and comprehensive coverage is ascertained from the perspective of the insured. It also recognizes the presumption of validity generally accorded to property coverages exclusions. This presumption, however, merely favors the rights of insurers to include such provisions in the respective coverages and does not determine whether such exclusions are enforceable in the context of a specific case. Two conclusions are reached. First, a case-by-case approach should be used to determine if an insurer is relieved from its obligation to provide comprehensive coverage when (1) a vehicle has been used in an unlawful manner, or (2) an unlawful event may have occurred during its use by an insured. Second, traditional tools of insurance contract interpretations should be used to determine whether an accident has occurred for purposes of comprehensive coverage