A recent New Jersey decision illustrated how the same loss could result in very different coverage outcomes based on differences in policy language. In Webster v. Palladium Associates, LLC, the Court carefully reviewed the often applied assault and battery exclusion of two different policies following a night-club shooting during a concert that causing one fatality and injuries to the plaintiff.

Plaintiff sued the owner of the property where the night-club was located and the tenant, the Palladium. Plaintiff alleged both defendants were negligent in failing to provide adequate security for the concert, ultimately leading to the incident. The property owner and tenant were insured by separate carriers with the owner named as an additional insured on the tenant’s policy. Both carriers disclaimed coverage based on the respective assault and battery exclusions.

In its quest for coverage, the owner filed a third-party complaint against the carriers; in response, the carriers moved for summary judgment based on the exclusion.The court determined that the assault and battery exclusion in the tenant’s policy, which specifically referenced claims encompassing inadequate security, met the clear and unambiguous standard and excluded the loss.

But the court ruled differently on the owner’s policy, determining that the exclusion did not preclude coverage because the language of the provision did not expressly exclude claims related to inadequate security or indicate to the average reader that such an allegation would not be covered. Rather, the provision stated only that assault and battery claims involving the insured or one of its employees were excluded.  As such, the allegations of negligence in the complaint for these claims triggered a duty to defend.

Thanks for Emily Kidder for her contribution to this post and please write to Mike Bono for more information.