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Severability or Limits of Protection Clauses Do Not Negate Unambiguous Exclusions



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The Supreme Court of Appeals of West Virginia recently found that intentional acts and criminal acts exclusions in homeowner’s insurance policies that prohibit coverage for the acts of “any insured” clearly and unambiguously preclude recovery by an innocent co-insured.  The Court further found that the exclusions are not negated by a “severability of insurance” or “limits of protection” provision in the policy as those clauses pertain to the limits of coverage and not to policy exclusions.

In American Nat’l Prop. and Cas. Co. v. Clendenen, et al.[1], the West Virginia Court answered two questions certified from the United States District Court for the Northern District of West Virginia arising out of the Skylar Neese murder litigation.  Sheila Eddy, Rachel Shoaf, and Skylar Neese were teenagers who had been friends for many years; however, Eddy and Shoaf wanted to end the friendship without fear that Skylar would reveal embarrassing information about them.  Eddy and Shoaf picked Skylar up in a vehicle, drove her to a remote location, stabbed her to death, and hid her body.  Eddy and Shoaf eventually confessed and pleaded guilty to the murder.  Thereafter, a wrongful death suit was filed by Skylar’s parents against Eddy and Shoaf and their mothers.  The mothers of Eddy and Shoaf were sued for “negligent supervision/entrustment” alleging that they were “negligent and careless in their supervision and guidance of their daughters.” Clendenen at n. 3.  ANPAC and Erie, issuing homeowner’s policies to the parents, filed federal declaratory judgment actions, later consolidated, challenging defense and indemnity obligations because of policy intentional and criminal acts exclusions arising out of the acts of “any insured” or “anyone we protect.”  Skylar’s parents and the mothers challenged the operation of those exclusions as to innocent co-insureds and, further, asserted that the “severability of insurance” or “limits of protection” clauses in the policies negated the exclusions.

Although the federal court believed the exclusions were unambiguous, clarification of any impact of the severability or limits of protection clauses on those exclusions was sought from the West Virginia Court.  The Supreme Court held that the clear and unambiguous policy language expressly excludes coverage for damages caused by the intentional or criminal acts of any insured and that “the severability [or limits of protection] clause’s command to apply the insurance separately to each insured does not alter the intentional/criminal acts exclusions’ plain meaning or create ambiguity in its application.  The purpose of severability clauses is to spread protection, to the limits of coverage, among all of the insureds.  The purpose is not to negate unambiguous exclusions.  The policies should be ‘read as a whole with all policy provisions given effect.'”  Clendenen at 39-40 (slip opinion).  Thus, there is no coverage for the claims against the mothers, which arose from the intentional and criminal conduct of Eddy and Shoaf.

Click here to read the full American Nat’l Prop. and Cas. Co. v. Clendenen, et al. decision.  Steptoe & Johnson attorneys Laurie Barbe and Amy Smith represented Erie in this case.


[1] ___ W.Va. ___, ___ S.E.2d ___, 2016 WL 6833123 (Nov. 17, 2016).