We buy insurance to protect us from unexpected losses from car accidents, home damage, personal injury claims, and other covered events. Unfortunately, not every claim gets paid. Many insurance providers deny coverage based on intentional act exclusion: a clause that allows them to refuse payment when they believe a policyholder deliberately caused harm or damage.
At first glance, this rule makes sense: paying for the outcome of intentional misconduct isn’t appropriate under most circumstances. But what happens when a legitimate claim is unfairly denied? What if an accident is misinterpreted as intentional? The insurance industry sometimes uses this exclusion as a blanket reason to avoid payouts and leave policyholders without the coverage they paid for.
Understanding how this exclusion works is key to protecting your rights as an injured person. In this guide, we’ll explain what it means, common situations where it’s applied, and legal strategies for challenging unfair denials. If your insurer uses the intentional act exclusion against you, a Michigan bad faith insurance lawyer can help you fight back.
What Is the Intentional Act Exclusion?
The intentional act exclusion is a clause in many auto, homeowner’s, and liability insurance policies that allows insurers to deny coverage when the damage or bodily injury was caused on purpose. In simple terms, insurance covers accidents: not intentional wrongdoing.
For example, if someone sets fire to their home for an insurance payout, their claim will be denied. If a driver deliberately rams another motor vehicle, their liability insurance won’t apply. The exclusion prevents people from using insurance to cover the consequences of deliberate actions.
However, intent isn’t always clear. Many insurance companies interpret actions as intentional even when they weren’t. What if someone was defending themselves? What if they lost control of their car but the auto insurer claims they crashed on purpose? These gray areas are where policyholders run into trouble.
Michigan Laws and Regulations
Michigan does not have a single statute explicitly governing the intentional act exclusion in insurance policies. Instead, the enforcement of this insurance policy exclusion is based on court rulings, contract law, and general principles of Michigan insurance law. However, two key legal principles and statutes come into play when disputing an insurer’s use of this exclusion.
Michigan Insurance Code: MCL 500.2833
This statute governs fire insurance policies in Michigan and includes language that prevents coverage for losses caused by the policyholder’s intentional acts. Specifically, MCL 500.2833(2) states that an insurance policy must include a provision voiding coverage if the insured intentionally causes a loss.
While this statute directly applies to fire insurance, courts often use it as a reference when examining intentional act exclusions in other types of policies, including auto and liability insurance.
Michigan Public Policy and Case Law
Michigan courts have consistently ruled that insurance contracts cannot be used to cover intentional conduct. This principle is based on public policy, which prevents individuals from profiting from their own harmful acts. Key court cases interpreting this exclusion include:
- Freeman v. Progressive Ins Co, 432 Mich 656 (1989): The Michigan Supreme Court ruled that an intentional act exclusion was valid and enforceable because public policy prohibits insurance coverage for deliberate harm.
- Auto Club Group Ins Co v. Booth, 289 Mich App 606 (2010): The Michigan Court of Appeals reinforced that for an insurance policy exclusion to apply, the insurer must prove the policyholder intended both the act and the resulting harm.
What This Means for Policyholders
Michigan law supports the general enforcement of the intentional act exclusion, but insurers must prove intent before denying insurance coverage. Courts will look at evidence, context, and whether the outcome was truly expected by the policyholder. If intent isn’t clear, policyholders may have a strong case to challenge a denial.
Key Legal Considerations in Michigan
Michigan law generally supports the principle that insurance should not cover intentional misconduct, but that doesn’t mean insurers can deny claims without proof. Courts consider several factors when determining whether an exclusion applies, including:
- Burden of Proof: The insurance company must prove the act was intentional. A denial based on speculation or assumptions isn’t enough.
- Subjective vs. Objective Intent: Courts look at both the policyholder’s actual intent and whether a reasonable person would view the act as deliberate.
- Public Policy: Michigan law discourages people from profiting from intentional harm, but it also protects consumers from unfair claim denials.
Common Scenarios: How the Exclusion Applies
While the exclusion is meant to prevent insurance coverage for deliberate misconduct, insurers often misapply it, leaving policyholders without the protection they expected.
Road Rage Accusations
If a driver is involved in a motor vehicle accident and the insurer claims they acted aggressively or caused the crash on purpose, the company may refuse to pay for vehicle damage or medical treatment. Road rage incidents are a common example where an insurance adjuster may assume a driver’s actions were deliberate, even if they weren’t.
Many drivers engage in split-second decisions behind the wheel. A sudden lane change, an aggressive maneuver to avoid a collision, or a misunderstanding between drivers could result in a crash. If the insurer claims the injured person meant to hit another car, they may invoke the intentional act exclusion. However, unless they provide clear evidence of intent, the denial can be challenged.
Staged Accident Allegations
Insurance companies are quick to deny claims when they suspect fraud, such as a staged accident. While fraudulent claims do happen, many legitimate claims are denied under false suspicions. If an insurer believes a crash was orchestrated for an insurance payout, they will apply the intentional act exclusion and refuse to cover damages.
If an accident is mistakenly classified as intentional or fraudulent, injured parties must provide evidence—such as witness statements, traffic camera footage, or police reports—to prove that the crash was genuine. Without proper legal support, an insurer’s wrongful assumption could leave the policyholder without coverage.
Arson and Accidental Fires
A common scenario involves house fires. If a home burns down, the company that issued the homeowner insurance policy will investigate whether the fire was accidental or intentionally set. If they suspect arson, they will deny the claim, arguing that the homeowner caused the damage on purpose.
However, proving arson is hard. Fires can start due to electrical issues, kitchen accidents, or even third-party actions. If an insurer incorrectly assumes a homeowner set the fire intentionally, the policyholder may need legal help to dispute the claim and demand evidence beyond speculation.
Vandalism and Property Damage
If a home is vandalized or damaged by an outside party, the homeowner expects their insurance to cover the loss. However, insurers may claim the damage was self-inflicted or staged to deny the claim.
For example, if a homeowner reports broken windows, graffiti, or intentional destruction of property, the insurer may argue that they caused the damage themselves to collect a payout. If a family member, guest, or tenant was responsible, the homeowner may also face denial, as insurers might classify the act as intentional conduct rather than accidental.
Domestic Disputes and Insurance Denials
Another common reason for coverage issues involves damage caused during domestic disputes. If a spouse, family member, or roommate damages property, the insurer may classify the incident as intentional and refuse to pay. In these cases, policyholders may need to prove that the damage was accidental or seek legal action to hold the insurer accountable if they wrongfully deny a valid claim.
Bar Fights and Workplace Altercations
If someone is sued for causing a physical injury, their liability insurance should provide coverage, unless the insurer claims the act was intentional. This often happens in situations involving bar fights, heated confrontations, or workplace disputes, where the insurer assumes the injured person meant to cause harm.
For example, if a person throws a punch in self-defense, their insurer may still deny coverage under the intentional act exclusion, arguing that any physical contact was deliberate. However, if the insured did not intend to cause serious harm or was acting in response to a threat, they may have grounds to challenge the denial.
Accidental Injuries vs. Deliberate Harm
One of the biggest disputes in liability claims involves accidental injuries vs. intentional harm. If someone is playing sports and accidentally injures another player, that should be covered under liability insurance. But if an insurer claims the injury was deliberate, they may deny the claim.
For example, if a person is involved in a shoving match during a basketball game and an injury occurs, the insurer may refuse coverage by classifying it as an intentional act. However, if the policyholder can prove that the injury was not deliberately inflicted, they may be able to challenge the denial.
Legal Challenges: Disputing an Intentional Act Exclusion
Just because an insurance agent claims an act was intentional does not mean they are right. Insurers frequently misinterpret, exaggerate, or manipulate the facts of a case to justify denying coverage. Fortunately, many policyholders successfully challenge these denials by presenting evidence that their actions were accidental, defensive, or reckless, but not intentional.
- Examining the Circumstances: The first step in disputing a denial is examining the facts surrounding the alleged intentional act. By carefully reviewing police reports, witness statements, video footage, and expert testimony, a policyholder can prove the exclusion does not apply.
- Misinterpretation of Events: Insurers may claim that a policyholder deliberately caused harm when, in reality, the incident was an accident, a misunderstanding, or a defensive act. For example, in auto accident cases, an insurance agent may argue that a driver intentionally rammed another vehicle, when in reality, the collision was caused by poor road conditions or a split-second reaction to avoid a crash.
- Ignoring Key Evidence: Insurance companies sometimes selectively use evidence to support their denial while ignoring facts that contradict their claim. An experienced attorney can expose these tactics and force the insurer to consider all available evidence.
- Proving Lack of Intent: Under Michigan law, the burden of proof is on the insurance company to show that the policyholder intended to cause harm or damage. Courts distinguish between intentional harm and unintended consequences, and many policyholders successfully challenge denials by proving they never meant for the damage to occur.
In some cases, insurers intentionally misapply the exclusion as part of a bad faith denial strategy. Michigan law protects an injured person from unfair insurance practices, and if an insurer is found to be acting in bad faith, they may be forced to pay compensatory damages beyond the original claim amount.
A bad faith denial can occur when an insurer:
- Refuses to consider key evidence that contradicts their claim
- Fails to properly investigate before denying a claim
- Misrepresents policy terms to avoid paying
- Ignores legal precedent that favors the policyholder
If an insurer engages in any of these tactics, a legal claim against them could result in compensation beyond the initial coverage amount. Here are the steps you can take to challenge an unfair denial:
- Request a Written Explanation: Insurers must provide a detailed reason for denying a claim. Understanding their reasoning can reveal flaws in their argument.
- Gather Evidence: Collect witness statements, expert opinions, video footage, and police reports that contradict the insurer’s claim.
- Consult an Auto Accident Attorney: An experienced insurance lawyer can analyze policy language, expose bad-faith tactics, and negotiate with the insurer on your behalf.
- File a Legal Complaint: If the insurer refuses to reconsider, a lawsuit can force them to prove their case in court, where the burden of proof is on them.
Michigan courts have a history of overturning wrongful claim denials, especially when insurers fail to provide solid evidence of both the act and the intended harm.
Protect Your Rights Against Unfair Claim Denials
The intentional act exclusion is a common tool the insurance industry uses to avoid paying claims, but that doesn’t mean they’re always right. Many policyholders face wrongful denials based on assumptions, misinterpretations, or bad faith tactics.
If your insurance company denied your claim under this exclusion, you don’t have to accept it without a fight. Michigan law protects policyholders, and with the right legal team, you may be able to reverse the denial and recover the compensatory damages you deserve.
At Lee Steinberg Law Firm, we have decades of experience standing up to insurance companies and winning for our clients. Don’t let an unfair denial cost you: call us today at 1-800-LEE-FREE for a free consultation, or fill out our online contact form and find out how we can help.