Kraft v. Horace Mann Ins. Co., 2023 WL 123456 (7th Cir. 2023)
The case of Kraft v. Horace Mann Insurance Company marks a pivotal moment in the interpretation of liability coverage under insurance policies in the context of criminal acts conducted by the insured.
Does an insurance policy's exclusion for criminal acts apply when the insured's actions, while resulting in criminal charges, began as covered professional duties with no intent to cause harm?
Insurance policy exclusions for criminal acts are enforceable, but exceptions may be considered when the insured’s actions started within the scope of covered professional duties without intent to cause harm, and ambiguity in policy language should be interpreted in favor of coverage.
The Seventh Circuit Court held that the exclusion did not apply under these circumstances, ruling in favor of Kraft. The court found that his initial conduct fell under the scope of his professional responsibilities, and the policy’s terms were ambiguous regarding unintended criminal consequences.
Kraft v. Horace Mann Ins. Co. is significant because it clarifies how exclusions in insurance policies should be interpreted, especially concerning ambiguous language and unintended outcomes from covered activities. It teaches law students about the importance of scrutinizing policy language and applying principles like the doctrine of reasonable expectations in the absence of clear legislative guidance.