NAII Seeks Clarification in N.J. Abuse Protection Bill

January 30, 2003

The National Association of Independent Insurers indicated that certain provisions in New Jersey Assembly Bill 689, designed to protect abuse victims, could actually do further harm by allowing abusive spouses to collect damages under a couple’s homeowners policy.

“No one would expect a person who commits arson to collect from his or her insurance company,” stated Donald S. Cleasby, NAII assistant VP and general counsel. “But by eliminating the intentional acts exclusion in situations where there may be domestic violence, Assembly Bill 689 would allow abusive spouses to collect under their homeowners policy.”

“In a hearing this week by the Senate Health, Human Services and Senior Citizens Committee on domestic violence, NAII recommended the bill’s authors make clear that the provisions of the bill do not impact the intentional acts exclusion,” said the bulletin.

It explained that P/C insurance policies typically contain an exclusion that removes coverage for intentionally inflicted damage or injury. “Insurance is meant to make a person whole after he or she has suffered injury or damage due to an event that is sudden or accidental, not to be a compensation vehicle for a policyholder to profit from intentional, destructive actions,” Cleasby stressed. The exclusions are a way to discourage willful, wanton and unlawful activity by making people personally responsible for the consequences of their acts. “Allowing policyholders to recover for their intentional acts removes this deterrent,” said the NAII.

“Although this well-intentioned bill was probably designed to protect abused women and children, there is no guarantee that insurance proceeds will not end up back in the hands of the person who committed the violent act in the first place,” Cleasby noted. “Not only could an abusive spouse be reimbursed for inflicting thousands of dollars worth of damage to jointly-owned property, but an insurer could find itself defending an abusive parent or spouse in the civil suit brought by the victim for damage resulting from the parental or spousal abuse.”

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