N.H. Court: Home Insurance Exclusion Applies in Babysitter Molestation

A New Hampshire couple sued for negligence after their son molested children they were babysitting does not have coverage under their homeowners policy that has a sexual molestation exclusion, the New Hampshire Supreme Court has ruled.

The Oct. 13 Supreme Court decision in Jennifer Philbrick v. Liberty Mutual Fire Insurance Co. reversed a Superior Court ruling in favor of coverage for the couple.

According to the court, the couple’s minor son sexually molested the Philbricks’ children while he was babysitting them. The Philbricks brought a civil action against the couple, alleging negligent supervision and negligent entrustment. The Philbricks also brought claims against the son for loss of consortium and assault and battery.

The couple being sued filed a claim with Liberty Mutual seeking coverage under their homeowners policy. Liberty Mutual denied coverage on three grounds: the events that gave rise to the claim for coverage did not constitute an “occurrence” as defined in the policy; the policy excluded coverage for bodily injury “expected or intended by one or more ‘insureds'”; and the policy excluded coverage for bodily injury “[a]rising out of sexual molestation.”

In response to Liberty Mutual’s denial, the Philbricks and the couple jointly filed a declaratory judgment action to determine the extent to which Liberty Mutual was obligated to provide coverage.

The trial court found that the insurance policy covered the negligence claims. The court concluded that the alleged negligent supervision and negligent entrustment were “occurrences,” and that the intentional act and sexual molestation exclusionary clauses were ambiguous and did not preclude coverage.

On appeal, Liberty Mutual argued that the sexual molestation exclusion “unambiguously precludes coverage of the negligence claims,” while the insureds argued that the language of the exclusion is ambiguous and, thus, should be construed in their favor. The Philbricks also argued that it was the insured’s negligence that caused the children’s injuries, rather than the sexual molestation, and thus the exclusionary clause was inapplicable.

The sexual molestation exclusion bars coverage for “‘bodily injury’ or ‘property damage’ . . . [a]rising out of sexual molestation, corporal punishment or physical or mental abuse . . . .”

The Supreme Court said the decision rested on the term “arising out of” and how broadly or narrowly it is interpreted.

The court rejected the argument that the assault and battery exclusion did not apply to the negligence claim because the damages arose from the insured’s negligence rather than the assault and battery. “Particularly where, as here, the language of the policy explicitly ties the exclusion to the nature of the injury, the analysis should be directed toward the injuries suffered, rather than the causes of action in the complaint,” the court wrote.