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Liability of Not -for -Profi t Organizations and Insurance
Coverage for Related Liability
By Jerold Oshinsky [1] and Gheiza M. Dias
Dickstein Shapiro Morin & Oshinsky LLP
Washington, D.C.
I. Introduction
In the past decade, legal claims against not -for -profit organizations have increased greatly in the
United States. Not -for -profit organizations are now being drawn into lawsuits on a scale previously
reserved for private businesses. The emerging lawsuits against not -for -profit organizations involve a
wide variety of legal issues, including tort liability, wrongful employment practices, personal injury,
membership discrimination, breach of fiduciary duty, and the liability of the parent or ganization.
Many executive directors of not -for -profit organizations are aware of their personal and organizational
risk of exposure to legal liabilities. Those directors who are cognizant of their potential legal liability
will want to learn the respons e to complex questions such as: “What is the extent of liability of not –
for -profit organizations for the actions of their volunteers versus the scope of personal liability of their
directors, officers, and employees? Does insurance coverage protect again st these liabilities?”
In answering these questions, the not -for -profit organization’s executive director will become aware
that there is an extremely wide range of potential personal and organizational liabilities, depending
upon each state’s statutory im munities and the allowable activities for not -for -profit organizations. Of
those executive directors who realistically examine the potential liabilities currently facing their
organization, many will choose to insure their activities to protect themselves and their operations. As
more not -for -profit organizations insure their operations, more will face disputes with their insurance
providers over their future insurance claims.
This article briefly outlines the types of legal liabilities already experienc ed by not -for -profit
organizations and the emerging legal issues related to those liabilities. It also provides information on
the types of insurance available to cover these existing and emerging liabilities. Finally, this article
will highlight various trends in insurance coverage disputes involving not -for -profit organizations.
i. II. Charitable Immunity
Historically, the charitable immunity doctrine protected charitable organizations from tort liability but
allowed injured parties to recover damages from volunteers and other employees of those
organizations. In the 1940s, state court decisions and state legislation began to allow recovery of
damages from not -for -profit organizations and, therefore, overturned portions of the charitable
immunity doctrine. [2] By 1992, almost every state had abrogated all or parts of the charitable
immunity doctrine.
Many courts, while addressing the issue of the charitable immunity doctr ine, concluded that charitable
organizations presumably have control over the activities of their employees and volunteers, and thus
should have the ability to take precautions to guard against injuries caused by such
activities. Moreover, since the solve ncy of many not -for -profit organizations is no longer in question,
not -for -profit organizations are now in the position to exercise better management and make certain
of the safety and compliance of their operations.
Since charitable immunity is no longer available, courts are now “free” to apply the doctrine of
respondeat superior, making not -for -profit corporations vulnerable and potentially liable for the torts
of their volunteers in the same manner that employers can be vicariously liable for their emp loyees’
actions. [3] As tort victims are no longer barred from recovering the costs of injuries caused by not –
for -profit organizations or their employees or volunteers, n ot-for -profit organizations are likely to

increase their insurance coverage for such lawsuits. Such an increase in lawsuits and insurance
coverage also will invariably lead to increased insurance coverage litigation by not -for -profit
organizations as they attempt to recover from their insurers the legal costs and liabilities imposed by
the courts in “covered” lawsuits.
III. Organizational Liability
Not -for -profit organizations are involved in a wide range of activities, many of which expose the
organizatio n, its directors, officers, volunteers, and employees to potential liability because of their
acts or omissions. Although the purpose of not -for -profit organizations is to serve the public interest,
these organizations, their directors, officers, voluntee rs, and employees may cause harm to others
and are thus susceptible to typical tort claims, as well as claims such as wrongful employment
practices and membership discrimination, among others.
Many courts have applied the traditional doctrine of respondeat superior in actions against a not -for –
profit organization for injuries caused by its volunteers and employees. There are a considerable
number of cases addressing this issue and some of these cases are discussed in the Appendix, infra
pp. 22 -30. In orde r to impose the respondeat superior doctrine, three requirements must be
met: (1) there must be an injury caused by the negligence or will of the servant (the employee or
volunteer); (2) there must be a master -servant (employer) relationship; and (3) the servant must
have been acting within the scope of her/his employment. [4] Negligence of the Servant
The first requirement when applying the respondeat superior doctrine is that there must be a finding
that the employee’s or volunteer’s conduct was negligent. In finding negligence, the courts will
consider if whether there was a breach of the standard of care by the volunteer or employee. In that
case, the expectations for standards of care may be lower for volunteers.
Master -Servant Relationship
A master -servant relationship is also required in order to apply the doctrine of respondeat superior. In
the ory, the employer (master) must have the right to control the physical conduct of the servant and
must consent to receive the volunteer’s or employee’s services, while expecting some benefits from
the service offered.
While addressing this issue, the court s require only the presence of the right to control rather than
actual control itself. In addition, the courts may consider the director’s or officer’s lack of supervision
responsibilities over the volunteer or employee irrelevant in order to find control . Finally, courts may
consider how an organization represents its relationship with a volunteer to the public in determining
the existence of the right to control a volunteer’s activity. [5] Scope of Employment
The third requirement to be met in order to apply the respondeat superior doctrine is whether the
volunteer or employee who caused the injury was acting within the scope of her or his employment at
the time of the injury. As usual, the tests to ascertain this requirement are by no means uniform
throughout the country. The court also must conclude that the act giving rise to the complaint was
done for the purpose of doing the work assigned. [6] IV. Volunteers’ Personal Liability
Not -for -profit organizations play a very important role in the American society and economy. In
recognizing that premise, legislatures have enacted severa l laws granting immunity to individual

volunteers of not -for -profit organizations and to governmental entities from liability for acts of
ordinary negligence (with some exceptions) committed in the course of their volunteer work.
For example, in 1997, Cong ress adopted the Volunteer Protection Act (“Act”), which primarily provides
protection to two types of organizations: (a) the not -for -profit organization described in Section
501(c)(3) of Internal Revenue Code of 1986 and; (b) any not -for -profit organizat ion that is organized
and conducted for the public benefit for charitable, civic, educational, religious, welfare, or health
purposes and which does not practice any action that constitutes a hate crime. [7] The Act defines a volunteer as an individual performing services for a not -for -profit organization or
governmental entity who does not receive: (a) compensation for his or her services, other than
reasonable reimburseme nt for expenses actually incurred, (b) or anything of value, in lieu of
compensation, in excess of $500 per year. This definition includes those who serve as a volunteer
Director, Officer, or Trustee. The Act does not completely protect not -for -profit o rganizations from
liability caused by a volunteer. It limits coverage to volunteers’ acts that are within the scope of their
responsibilities and that amount only to ordinary negligence, and do not constitute willful or criminal
conduct, gross negligence, or reckless misconduct. In addition, volunteers are granted immunity from
awards of punitive damages in cases seeking damages resulting from an act by a volunteer, when the
volunteer was acting within the scope of his or her responsibilities. [8] As noted, the Act does not cover willful conduct or criminal misconduct. Thus, if a claimant
establishes that the volunteer’s act or omission constituted willful or criminal misconduct that was a
proximate cause of damage or loss, then volunteers could be held personally liable for the damages
caused to the third party.
The volunteer presents a double concern to the organization if his or her act is in furtherance of the
work or purpose of the agency. There are innumerable cases concerning the liability o f an employer
for the acts of an employee or independent contractor. These same principles of agency, scope of
employment, delegation of authority, etc., all can apply to the relationship between the volunteer and
the organization for which he or she is v olunteering. Jurors may be prone to find that any volunteer
who causes harm to a person is acting in some manner on behalf of the organization, thus making
the organization liable for the acts of the volunteer. [9] The following section briefly discusses some of the liabilities that have been faced by not -for -profit
organizations in recent years.
V. Theories of Liability
A. Tort Liability
The type of litigation that has i ncreased most for not -for -profit organizations in the recent past is tort
liability claims. Tort claims involve all sorts of not -for -profit organizations and their parent and sister
organizations, including, for example, religious organizations. Liabilit y can be imposed for improper
selection, assignment, training, and supervision of volunteers.
The extent of liability to which not -for -profit organizations are exposed is aggravated by the fact that
not -for -profit organizations are liable for the torts of their volunteers to the same extent that
companies are liable for the torts of their paid employees. Assuming the right to control, an
imposition of liability is said to be justified because the tort system can properly encourage
organizations, including not -for -profit organizations, to develop better volunteer management
services. [10] B. Wrongful Employment Practices
Wrongful employment suits are usually brought by emp loyees against employers for matters such as
discrimination, sexual harassment, wrongful discharge, etc. The complaints in these cases seek

damages for a single or continuous bodily injury and have named as defendants not -for -profit entities
such as churc hes, parishes, and sports associations, to name a few.
Courts usually divide not -for -profit organizations into one of three categories: (1) religious
organizations, (2) universities or private colleges, and (3) other private not -for -profit
organizations. [11] While addressing the underlying issues, the courts balance particular issues
related to each dispute, such as those related to religious careers, when interpreting the meaning of
the policy. In the context of religious institutions, the courts have the tendency not to become
involved in religious disputes. For instance, in Powell v. Stafford, [12] the District Court of Colorado
found that application of the Age Discrimination in Employment Act of 1967 (“ADEA”) would violate
the First Amendment and ruled that ADEA would not apply to employees that perform primarily
religious functions because applica tion of ADEA in such cases would require the courts to make a
fundamentally religious decision. In the same case, the court also ruled that the state’s interest in
protecting against age discrimination did not override the church’s freedom of religious ex ercise,
including the church’s decisions as to who may be directly involved in the spiritual function of teaching
ecclesiastical doctrine. [13] Wrongful employment case s also will raise additional issues, especially in cases involving the intent of
the party causing the injury and the scope of the directors’ or officers’ employment responsibilities.
C. Patent or Copyright Infringement
Not -for -profit organizations are fac ing not only claims for wrongful employment and tort liability, but
also for damage allegedly caused by infringement of patent or trademark law. The policyholders that
are exposed to these types of claims include schools, publishing companies, athletic as sociations
among others. The costs of these cases can be significant. As one commentator noted:
The minimum cost to take a patent infringement action to trial now ranges from $150,000 to
$300,000. Fees often exceed $1 Million and have reached as much as $25 Million. [14] The copyright infringement liability of governmental agencies and not -for -profit organizations does not
extend to those organizations that have a prima ry mission to provide specialized services to the
training, education, or adaptive reading information access need of the blind or other persons with
disabilities. [15] However, the exemption granted to these organizations does not apply to
standardized, secure, or norm -referenced tests and related testing materials, or to computer
programs that are in conventional human language.
In patent and trademark infringement ca ses, insurance coverage may be found under advertising
injury provisions in Comprehensive General Liability (“CGL”) and Director and Officers (“D&O”) liability
policies. The coverage will be invoked if the presence of an injury or loss is proven to be cau sed by
piracy, unfair competition or infringement.
D. Product Liability
As product liability cases involving for -profit organizations have proliferated in recent years, they have
drawn in not -for -profit organizations, which also have been named as defendan ts. The product
liability exposure may involve all types of products and, thus, product liability doctrines may be
applied to not -for -profits in the same manner as to for -profit organizations. Coverage for both kinds
of organizations, is likely to be fou nd in CGL policies.
Some of the substantive issues that may be addressed in product -related liability cases involving not –
for -profit organizations often include the scope of liability and application of strict liability
doctrine. For example, the Court o f Appeals of Arizona, in Dillard Department Stores, Inc. v.
Associated Merchandising Corp., [16] held that a not -for -profit organization could not be held liable
for inju ries resulting from a defective product. The court relied on the fact that not -for -profit
organization activities were intended solely to assist member stores to find potential manufacturers for

desired products, and the purchases of member stores were ma de directly from the manufacturers of
their choice, without any direct involvement of the not -for -profit organization. In that case, the
plaintiffs sought application of the strict liability doctrine, alleging that the defendant “AMC” was a
broker in the chain of distribution, and thus could be held strictly liable for a defective
product. However, plaintiffs’ arguments did not prevail.
E. Membership Discrimination by Not -For -Profit Organizations
These suits involve cases in which a not -for -profit organ ization, generally a club, has denied
membership or employment to, or discriminated against, a non -member. These claims usually are
brought under state civil rights statutes prohibiting discrimination in places of public accommodation
and are likely to be covered under CGL and D&O policies. The major types of discrimination include
those based on race, color, sex, religion, ancestry, or national origin. In Warfield v. Peninsula Golf &
Country Club [17] , the California Supreme Court reversed trial court’s decision ruling that the Club
constitutes a business establishment within the meaning of section 51 of California Civil Code (also
known as the Unruh Civil Rights Act) and thus the application membership policies provided in section
51 by the Club did not violate its members’ rights of association and privacy. [18] In Harris v.
Mother s Against Drunk Driving [19] , the parents of child killed in an alcohol -related accident were
denied membership in Mothers Against Drunk Driving (“MADD”). The Harris’, t he parents of the killed
child, sued MADD alleging arbitrary discrimination against them and violation of section 51 of the
Unruh Civil Rights Act (“Act”). The Court of Appeals of the Second Circuit determined that “business
establishment” terminology sho uld be construed in the broadest meaning possible and that not -for –
profit organizations should be included. In addition, the Court considered several factors to qualify a
not -for -profit as “business establishment,” including number of employees or staff, purpose of
organization’ activities, fees or dues charged to members, and business benefits provided with
membership. [20] F. Liability of the Parent Organizations
Not -for-profit parent organizations can be held liable for their chapters’, parishes’, or affiliates’
wrongdoings. The liability will be imposed depending upon the amount of control exercised by the
parent over its affiliate, as well as the public’s perception of such control. Although it may appear
impossible for a person to exercise ownership control over a non -stock, not -for -profit corporation, a
person still be can held liable under the alter ego theory if evidence present that the dominant
corporation cont rols and uses the other (affiliate) as a mere instrument to carry its own business
plans, or if the acts of parent and affiliate are of such confusion as to make it impossible to determine
who controls.
In Jones v. Briley, [21] the court concluded that allegations of injury suffered from an accidental
shooting, posed against a not -for -profit organization, were insufficient to justify the imposition of alter
ego theory, since the complaint alleged neither the presence of commingl ing of corporate and
shareholders funds, nor a failure to follow the statutory formalities required by statute, nor was a
failure to keep separate bank accounts and bookkeeping records. (See also Communist Party of the
United States v. 522 Valencia, Inc. [22] “plaintiff was neither entitled to a constructive trust, nor
could it use the alter ego doctrine to ‘pierce the corporate veil’ of a public benefit corporation. A
constructive trus t cannot exist unless there is evidence that property has been wrongfully acquired or
detained by a person not entitled to its possession.”)
G. Breach of Fiduciary Duty/ Director Liability
The directors or officers of not -for -profit organizations have cert ain fiduciary duties to the organization
which primarily are the duty of care and the duty of loyalty. Not -for -profit statutes may limit or
eliminate director or officer personal liability for breach of fiduciary duty, but directors and officers
may still face the threat of potential liability for breach of the duty of loyalty. [23] Breach of fiduciary duty is typically covered under D&O liability insurance. The major is sue to be
raised while litigating the underlying cases is the scope of fiduciary duty standards for not -for -profit

organizations set by each state. Surprisingly, not -for -profit organizations may face a higher exposure
to the underlying claims, since the s tandard of care for not -for -profit corporations set by each statute
is likely to be higher than the fiduciary standards of business corporations. [24] The underlying cl aims also may present opportunities for coverage under errors and omissions
insurance policies and multimedia liability policies.
VI. Directors and Officers Personal Liability (Focus on New York)
Directors and officers of not -for -profit organizations could face personal liability for their grossly
negligent acts, omissions, and intentional torts. Not -for -profit organizations may cover the risk
exposure through insurance programs. Insurance compan ies have tended to be reluctant to cover the
risk exposure posed by not -for -profit organizations and have restricted access to affordable insurance
because the risk of volunteers’ liability has been shown to be very high, considering that not -for -profit
organizations often do not have a large measure of control over their volunteers and do not
adequately supervise them. For this reason, many not -for -profit organizations operate on a self –
insured basis and are exposed to a high liability risk as a result of their activities. The following is an
example of the potential liability and risk absorbed by the not -for -profit when self -insured: The
director of a not -for -profit organization orders the organization’s volunteer (who happens to be
seriously intoxicate d) to drive a company car on business. The driver causes an accident and injures
others. The director will be personally liable for the injuries because, under tort law, the director is
required to act with the foresight that a reasonable person would ex ercise to ensure that his or her
actions do not injure others in society. [25] The liability in this particular example is imposed
because directors or officers of not -for -profit organizations have a duty of care while in the course of
their activities and are expected to exercise reasonable care and diligence as well as informed
decision -making. [26] Directors or officers of not -for -profit organizations also may face liability for breach of fiduciary duty to
members of the organization. However, they may avoid liability if they acted in good faith and to
forward the best interests of t he organization. [27] Additionally, directors and officers may also face liability exposure to derivative suits. Generally, these
suits are brought on behalf of the not -for -profit organization by persons who believe the organization
has been damaged by acts of its directors or officers. Even though the majority of derivative suits are
brought by such persons, these suits are unlikely to succeed, since the plaintiffs usua lly do not have
the standing to bring such actions.
For instance, according to New York law, very few individuals can bring a suit on behalf of not -for –
profit organizations. Only the Attorney General, directors of the board, and members (if 5% or more
of the membership agree to bring the action) may bring a derivative suit on behalf of the not -for -profit
corporation. [28] The requirements to bring a derivative action ag ainst a board member are difficult
to meet, and, thus, derivative suits usually are of little concern for directors and officers of not -for –
profit organizations.
The Volunteer Protection Act of 1997 protects directors or officers from personal liability re sulting from
their negligent acts or omissions. The directors’ or officers’ intentional torts, grossly negligent acts, or
omissions present a risk not covered under the Act. In fact, the risk exposure has proven to be a
factor when directors or officers are offered management positions to direct not -for -profit
organizations. The threat of tort liability and many other exposures has begun to pose a serious
problem for the directors or officers of these organizations.
It is important to note that the litig ation costs involved in each type of potential liability may reach
astronomical sums. For this reason, insurance coverage will continue to be valuable protection for
not -for -profit corporations, since insurance coverage carries the duty to defend the insu red even in
the most meritless case.

VII. Think Insurance
Forms of Insurance Coverage for Not -for -Profit Organizations
Faced with the developments of not -for -profit organizational exposure to liability, it is prudent for
these organizations to purchase ge neral liability insurance, as well as directors’ and officers’ liability
insurance. In the case of existing liability insurance, the not -for -profit organization should evaluate its
activities and existing insurance coverage to determine whether additional coverage is necessary to
provide protection against the risks of liability. This section will briefly describe the types of insurance
that may cover potential liabilities in the not -for -profit setting and will identify some of the major
issues that polic yholders may face in insurance coverage disputes.
1. Commercial General Liability Insurance
The Commercial General Liability (“CGL”) insurance policy is the successor to the Comprehensive
General Liability Policy that had been available since the 1940s. The CGL policy provides coverage for
companies and individuals. CGL is a typical all -risk insurance policy that usually covers bodily injury
or property damage caused by the insured to a third party, including bodily injury or property damage
arising in co nnection with losses caused by the insured’s operations. CGL insurance also provides
liability coverage for bodily injury and property damage for the insured’s products. Coverage under
CGL insurance policies is typically quite broad. A CGL policy usuall y provides that the companies will
pay for “all sums” that the insured shall become legally obligated to pay as damages because of bodily
injury, property damage, personal injury, and advertising injury.
The issues raised in insurance coverage cases of not -for -profit organizations are likely to be the same
as those raised in for -profit corporations, including, but not limited to: (a) the standard for the duty
to defend; (b) the trigger of coverage; (c) the number -of-occurrences; (d) notice; (e) the intent to
cause the particular injury; and (f) the definition of bodily injury within the meaning of the policy at
issue.
2. Directors’ and Officers’ Liability Insurance
The extent of directors’ and officers’ (“D&O”) liability insurance for not -for -profit organiz ations may be
broader than that of traditional corporate D&O policies. [29] While traditional D& O policies cover
directors and officers as well as a limited number of managers, D&O policies for not -for -profit
organizations are likely to extend their coverage to other employees, and even volunteers of the
organization.
D&O policies provide coverage f or costs and expenses that board members, trustees, officers,
employees, and volunteers may incur as a result of claims brought in connection with their service to
the organization, as well as for expenses that the organization may incur to indemnify these
individuals against such claims. D&O policies issued to a not -for -profit organization also may provide
coverage for certain claims made directly against the organization. These policies typically cover
claims made against the insured and are reported to the insurance company while the policies are in
force.
The next sections of this article will outline the major issues and legal ramifications of insurance
coverage with a focus on the not -for -profit organization.
a. The Duty To Defend And Pay Defense Cos ts
For many not -for -profit policyholders involved in any of the underlying claims out of which coverage
disputes can arise, the provision of a defense in judicial actions and/or administrative proceedings is of
paramount importance, because defense costs c an far exceed the net amount of any judgments or
settlements entered against policyholders in underlying cases. Liability insurance policies, such as

CGL and D&O policies, impose a duty on the insurance companies either to defend or to pay the
policyholde r’s defense costs in any suit that does not exclude the possibility of coverage.
The insurer’s duty to defend arises, as a matter of law, with respect to judicial and non -judicial actions
against a policyholder, when any of the underlying allegations raise the potential for coverage under
the insurer’s liability insurance policies. Thus, if there is any possibility of coverage based on the
allegations, the insurance company must defend and pay for the defense costs.
In order to avoid its defense obligation s, the insurance carrier must demonstrate that no possible
factual or legal basis exists on which it eventually might be obligated to indemnify the
policyholder. [30] Ho wever, if the allegations of the underlying complaint assert a claim for which the
policy potentially provides coverage, the insurance company must assume the defense of the
action. [31] The insurance company’s defense obligation is independent of, and broader than, its duty to
indemnify. Thus, the duty to defend is not dependent on a showing that the insurance company will
be obligated to indemnify the policyholder. In addition, the insurance company is obligated to defend
the policyholder even if the underlying allegations are groundless, false, or fraudulent. Moreover, if
some, but not all, of the allegations might fall within the policy coverage, then the carrier’s d uty to
defend extends to the entire case. [32] Yet, the protection is not absolute. In Tichenor v. Roman Catholic Church, 32 F.3d 953 (5th Cir.
1994), the Court of Appea ls decided that a CGL policy issued to a defendant did not provide coverage
for a former priest accused of a sexual relationship with a minor, neither as named insured nor as an
employee of the named insured. The court relied on allegations of the underly ing complaint that
involved conduct well outside of the scope of the priest’s employment.
Some insurance policies, for example, directors’ and officers’ liability policies and other errors and
omissions policies, certain excess liability policies, etc., ex plicitly provide that the insurance company
does not assume any duty to defend. [33] Instead, the insurance company agrees to provide
defense expenses coverage, pursuan t to the “loss” provisions of the policy. [34] b. Choice of Law and Choice of Forum Concerns
Choice of law embodies the determination of what state’s law applies to the c overage case, while
choice of forum determines where a suit may be brought. Both issues have become integrally tied in
recent coverage cases and together represent one of the pivotal issues in coverage cases today.
In the past, choice of law was barely ad dressed by the courts. However, choice of law is no longer a
non -issue. Since the early coverage cases were decided, courts throughout the country (on both the
state and federal levels) have issued rulings in hundreds of coverage cases, particularly envi ronmental
insurance coverage cases, and the results are in no way uniform. Policyholders and insurance
companies today, therefore, are engaging in complex choice -of-law analyses even before a coverage
case is filed in order to find a forum with the law th at will be advantageous to their position. Once the
coverage litigation commences, the courts now almost uniformly engage in extensive choice -of-law
analyses to determine which state’s law will apply to the issues presented in a coverage
action. Courts e ngaged in choice -of-law analysis, applying varying tests, generally have placed the
greatest weight on either: (1) the place where the policies were contracted; [35] (2) the location of
the underlying site (or sites) at issue; [36] or (3) the principal place of business, or headquarters, of
the policyholder, [37] in making their choice -of-law determinations. Many of these courts have found
that the laws of different states may apply to the different issues presented in the same coverage
case.
c. The Tri gger of Coverage

The trigger of coverage is the event or condition that determines whether an insurance policy applies
to a claim. Liability insurance policies typically provide coverage (i.e., are triggered) either (a) in the
case of personal injury liability, associated with an “offense arising out of [a] business. . .”, or (b) in
the case of bodily injury or property damage, when such “bodily injury” or “property damage” [38] is
“caused by an occurrence.” [39] In either case, where an offense or employment practice is long –
standing or continuing in nature, multiple insurance policies may be triggered. [40] The greatest amount of litigation regarding the trigger of coverage in recent years has involved bodily
injury and property damage claims under CGL polici es. The CGL policy provides that the policy applies
“only to bodily injury or property damage which occurs during the policy period.” The question then
has been: When does injury take place? There are four trigger -of-coverage theories that most
commonl y have been adopted by the courts in insurance coverage cases: (1) the continuous trigger;
(2) the exposure trigger; (3) the injury -in-fact trigger; and (4) the manifestation trigger.
Where there is bodily injury or property damage spanning multiple polic y periods, the overwhelming
number of cases, including those relating to sexual molestation claims, have adopted a form of
continuous trigger requiring each policy in effect to provide coverage. In Diocese of Winona v.
Interstate Fire & Casualty Co., 858 F. Supp. 1407 (D. Minn. 1994) (“Diocese of Winona”), the Court
found that the damage caused by former priest was not “expected” and concluded that sexual
molestation acts committed by the priest constitute “one continuing occurrence,” providing coverage
un der each policy of the various insurers, except those that contained a sexual abuse exclusion. [41] Under the exposure theory, the trigger of coverage is the contact with the cause of injury. Under the
injury -in-fact trigger of coverage, a policy is triggered when the injury or damage “actually” has
happened. Several courts have adopted some form of the injury -in-fact trigger. [42] Under the manifestation theory, an insurance policy typically is triggered either when the injury or
damage is detected or when an action is brought against the policyholder. See, e.g., Am. Motorists
Ins. Co. v. E.R. Squibb & Sons, 95 Misc. 2d 222, 406 N.Y.S.2d 658 (1978) (DES).
In contrast, D&O policies typically are “claims -made” and “reported parties” triggers. That is, they are
triggered if the claims are made against the insured and reported to the insur ance company during
the policy period.
The array of trigger decisions in these cases demonstrates how varied the law is on coverage issues
nationwide, and why choice of law and choice of forum (discussed supra) have become such pivotal
issues in recent cov erage cases. On the other hand, a policy may be written on an under “claims –
made” basis. In that event, the act that gave rise to the underlying claim does not control whether
the policy provides coverage. Rather, the insurance company agrees to provide coverage only for
those claims which are “made against the policyholder” (and “reported to the insurance company” in
some policy forms) during the policy period. [43] Additionally, the policyholder may raise issues
about the definition of claims within the meaning of “insurance policy” and “known event,” from the
standard point of the insured, that would reasonably be expected to result in the filing of a claim.
d. The “ Expected or Intended” Issue
In insurance coverage litigation involving “occurrence” policies, the insurance companies typically raise
an issue of whether the policyholder’s conduct satisfies the definition of an “occurrence.” Some
policies provide coverag e for bodily injury or property damage resulting from a policyholder’s
intentional acts, as long as the policyholder did not intend to cause the specific injury or damage
that which resulted. [44] The insurance companies have the burden of proving that the policyholder
expected or intended to cause such specific injury or damage.
The phrase “neither expected nor intended” appears in the CGL policy as part of the definit ion of
“occurrence.” The “neither expected nor intended” language in the CGL policy covers legal liability for

damages that are unintended from the standpoint of the policyholder, even if those damages are the
consequences of the policyholder’s intentiona l acts.
The coverage does not extend to claims where the injury at issue was a substantially probable result
of continuing exposure caused by insured’s willful indifference. For example, in Diocese of Winona, a
not -for -profit organization filed an insuran ce coverage action against its liability insurers, seeking a
declaratory judgment that the archdiocese was entitled to coverage for the negligent and reckless
supervision claims alleged by the victim who had been sexually abused by a former priest over sev eral
years. The court ruled that under Minnesota law, the continuous sexual abuse of the child by the
priest, after the priest was transferred to another diocese, was “expected” by the insured and thus did
not constitute an “occurrence” within the meaning of the initial diocese’s liability insurance policy. The
priest’s malicious conduct had extended over fifteen years, leading the court to conclude that the
diocese disregarded these known risks involving the priest and failed to provide adequate supervis ion;
therefore, the initial diocese was not entitled to coverage by any of its insurers. [45] This underlying decision is particularly interesting because the second dioc ese, the archdiocese, also
involved in the claim, was granted coverage until December 1980. The court came to this conclusion
because, while the priest was negligently transferred to another diocese, the archdiocese was not
“apparently aware” of the pries t’s past behavior until late in 1980. Furthermore, not -for -profit
organizations should be aware that the known or expected issue plays a major role while litigating
claims involving continuous exposure, such as repetitive sexual abuse conduct committed by their
volunteers, directors, or officers.
Moreover, other exclusionary provisions must also be carefully analyzed by not -for -profit organizations
while purchasing liability insurance for special events. Many not -for -profit organizations purchase the
CGL policy, which provides the standard coverage and exclusions. For instance, if a not -for -profit
organization promotes an event that authorizes it to sell alcoholic beverages and a third person is
injured as a result of a car accident, which is proved to h ave been caused by alcohol intoxication, the
exposure of the not -for -profit organization is apparent. For example, in Nichols v. Westfield Insurance
Co., [46] the Georgi a Court of Appeals held that a dram shop exclusion precluded a fraternal civic
organization from obtaining coverage for wrongful death claims based on dram shop liability because
the organization was “in the business” of selling alcohol. Although the poli cy did cover bodily injury,
coverage of defense costs and liability was barred because an exclusion provision applied. The
decision also considered that the term “business” in the policy was not considered ambiguous and,
thus, the law did not distinguish between not -for -profit and for -profit organizations.
e. The Meaning of “Bodily Injury” or “Property Damage” in the Policies at Issue
Policyholders may seek coverage for business -related torts under the insuring agreements in some of
their liability policie s which provide for insurance coverage for “bodily injury” or “property
damage.” For example, these provisions in CGL policies generally provide that:
The company will pay on behalf of the insured all sums which the insured shall become legally
obligated to pay as damages because of bodily injury or property damage to which this policy applies,
caused by an occurrence.
“Bodily injury” is generally defined as “bodily injury, sickness or disease sustained by any person
which occurs during the policy period, including death at any time resulting therefrom.” An issue that
may arise in bodily injury cases is just what constitutes “bodily injury” – – for example, whether
underlying allegations of “emotional distress” constitute “bodily injury” within the meanin g of the
insuring agreements of the insurance policies. Several courts, including the highest court of New
York, in varying types of cases, have found that emotional distress may constitute “bodily injury”
under certain circumstances. [47] “Property damage” generally is defined as: “(1) physical injury to or destruction of tangible property
which occurs during the policy period, including the loss of use thereof at any ti me resulting
therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed,

provided such loss of use is caused by an occurrence during the policy period.” Damage to tangible
property may include damage from loss of use of the property during replacement or removal. Where
there is damage to “tangible” property, the CGL policy clearly provides coverage.
f. The Number -of-Occurrences Issue
The concept of an “occurrence,” as that term is used in liability insurance poli cies gives rise to two
related but independent issues. The first issue concerns the timing of the results of an occurrence,
i.e., the trigger of coverage. The second issue concerns the number of occurrences for purposes of
determining per occurrence lim its of liability and per occurrence deductibles.
The timing issue depends on when the alleged injury that is the result of an occurrence took place. In
contrast, the number of occurrences determines the number of times the limits of a triggered policy
wil l apply to pay for a loss. The number of occurrences also may determine the number of deductibles
or the retrospective premium, if any, that the policyholder must pay.
The number of occurrences can be important in many cases because the policyholder may h ave a
large self -insured retention or per -occurrence deductibles in its policies, and a determination that
injury was caused by multiple occurrences ultimately could result in little or no coverage under an
insurance policy.
Generally, courts use four appr oaches to determine the number of occurrences for purposes of the
policy limits and deductibles: (1) the cause test, used by the majority of courts, which calculates the
number of occurrences based on the overall conduct ultimately resulting in the bodily injury or
property damage for which the policyholder is seeking coverage; [48] (2) the effects test, which looks
to the number of the ultimate effects of the conduct to determine the number of
occurrences; [49] (3) the liability -triggering event tes t, which looks neither to the cause of the injury
nor to the effects of an act to determine the number of occurrences, but rather looks to the event
which triggers the liability of the policyholder; [50] and (4) the unfortunate event test, which,
recognizing that there may be more than one cause for purposes of determining the number of
occurrences, looks to the “unfortunate event” from which the claim or claims arose. [51] g. Allocation of Defense and Liability Payments
The standard CGL policy provides that “the company will pay on behalf of the insured all sums which
the insured shall be come legally obligated to pay as damages.” Because the policy requires the carrier
to pay “all sums,” the policyholder, therefore, should be entitled to coverage in full under each of the
triggered policies at its option, up to the limits of liability, if any, of each policy, regardless of how
many policies are triggered. The “other insurance” clauses in the subject policies should apply only to
apportion liability among the insurance companies.
Policyholders generally argue in favor of allocation based o n “joint and several” liability. They contend
that, once triggered, an insurance policy provides full coverage for the policyholder’s liability. [52] Insurance companies often argue for a pro rata allocation among the insurance companies on the risk,
and often will include the policyholder in the pro rata allocation if the policyholder is self -insured, or
was uninsured for any period of time. [53] A pro rata allocation formula was applied in Diocese of
Winona. The court relied on Northern States Power Co. v. Fidelity & Casualty Co., 523 N.W. 2d. 657,
664 (Minn. 1994), holding that each triggered policy bears a share of the total damages proportional
to the time period it was on the risk relative to the time period coverage was triggered. Thus, the
archdiocese must bear its share of the liability risk for the period in which it was self -insured.
Allocation issues presented by claims -made policies, such as D&O and other errors and omissions
policies, are somewhat different. With regard to the duty to pay defense costs, case law construing
such policies generally provides for allocation b etween covered and non -covered claims. Where
coverage is unclear, insurers must pay all defense costs on an interim basis. Rite Aid Corp. v. Great

Am. Ins. Co., No. 1:CV -92 -0146 (M.D. Pa. Feb. 1, 1993) (finding no allocation between costs of
defense of c orporation and costs of defense of director because corporation’s liability was wholly
derivative of that of director).
VIII. Conclusion
Not -for -profit organizations, at one time immune from any liability, are now held liable for
wrongdoings of their volunteers, employees, directors, and officers. In addition, the exposure to other
types of liability is now higher than ever and many not -for-profit organizations are looking for new
alternatives to compensate for or insure against the potential losses that will come.
The number of potential not -for -profit policyholders with coverage problems is on the rise as new
underlying cases are filed in significant numbers. Many of these cases will not only raise new issues
relating to the interpretation of policies that have previously been at issue in earlier coverage litigation
but also will call upon courts to interpret new policy provisions and typ es of insurance policies as well.
When underlying claims come to the attention of the management of a not -for -profit, one of the first
steps the organization as a policyholder needs to take is to ascertain what insurance it has that
potentially may provid e coverage for the claims, so that the policyholder can provide notice to its
insurance companies promptly. Ideally, policyholders should have a complete picture of all of their
insurance coverage (i.e., all policies, for all years of operation or existen ce) even before new
underlying claims arise, since triggered policies are likely to be past policies. Then, when a potentially
covered claim does arise, the policyholder can easily identify all insurance companies to whom notice
is to be given, and can gi ve a prompt notice, so that the policyholder receives all of the insurance
coverage to which it is entitled.
Appendix
Case Law
Survey of recent Not -For -Profit Case Law
I. New York Supreme Court, Appellate Division, First Department
1. Tort Liability
Schia vone v. Brinewood Rod & Gun Club, Inc. [54] A member of a not -for -profit recreational club suffered injury when he drove over a hole while riding a
dirt bike on unimproved club property. The member brought a negligence action against the
club. The club moved for summary judgment. The Supreme Cour t, Bronx County, denied the motion,
and the club appealed. The Appellate Division, First Department, held that: (1) the affidavit of the
club member’s friend that there was grass growing in the hole did not create a factual issue precluding
summary judgm ent; and (2) the member assumed the risk of injury. In holding that the defendant
was entitled to summary judgment on the ground that the plaintiff assumed the risk as a matter of
law, the court relied on Morgan v. State:
[B]y engaging in a sport or recre ational activity, a participant consents to those commonly appreciated
risks which are inherent in and arise out of the nature of the sport generally and flow from such
participation … risks which various participants are legally deemed to have accepted pe rsonal
responsibility for because they commonly inhere in the nature of those activities. [55] The court continued, relying on Turcotte v. Fell:

Under this formulation it follows that the duty of a landowner is “to exercise care to make the
conditions as safe as they appear to be. If the risks of the activity are fully comprehended or perfectly
obvious, plaintiff has consented to them and defendant has performed its dut y.” [56] 2. Breach of Fiduciary Duty
Westchester Religious Institute v. Kamerman [57 ] A nonprofit corporation brought a breach of fiduciary relationship action against its former
officers. Following remand, the Supreme Court, New York County, denied the officers’ motion for
partial summary judgment dismissing the claims for an accounting on limitations grounds, and the
officers appealed. The Appellate Division, First Department, held that the breach of fiduciary
relationship action was filed within the six -year limitations period and affirmed the trial court decision.
3. Disability Discr imination
Posner v. Central Synagogue [58] A parent of a child sued a tax -exempt, nonprofit religious institution for breach of contract and moved
for leave to amend the complaint to allege a disability discrimination claim and to transfer the action
from civil court to the New York Supreme Court. The Supreme Court, New York County, denied the
motions and ordered the parent, who appeared pro se, to pay $100 in motion cost s to the religious
institution’s counsel. The parent appealed. The Appellate Division, First Department, affirmed the
trial court decision, holding: (1) the disability discrimination claim was insufficient on its face, since
the plaintiff had failed to establish any factual or legal basis for the proposed amended claim that the
defendant had engaged in discriminatory conduct; (2) the parent was not entitled to amend the ad
damnum clause; and (3) the parent was properly sanctioned.
4. Gender Discriminatio n
Elaine W. v. Joint Diseases North General Hospital, Inc. [59] A pregnant hospital patient with substance abuse problems brought an action against a hospital for
alleged discrimination based on gender resulting from their exclusion from the hospital’s inpatient
substance abuse program. The Supreme Court, New York County, denied the hospital’s motion for
summary judgment, and the hospital appealed. The Appellate Division , First Department, reversed
and dismissed the complaint, holding that the hospital’s policy was not gender -based discrimination,
since the hospital did not illegally discriminate against pregnant substance abusers based on gender
by excluding them from it s inpatient substance abuse program, where the hospital did not have an
obstetrics department, and the hospital’s policy was based upon sound medical judgment. On appeal,
the Court of Appeals of New York reversed and denied the hospital’s motion for summa ry judgment,
holding that the hospital had failed to establish that its blanket exclusion did not constitute unlawful
sex discrimination merely by showing that it was not equipped, staffed, or licensed to provide
obstetrical services.
II. Supreme Court of New York, Westchester County
5. Tort Liability
Moskowitz v. Lambert [60] A personal representative of a decedent brought an action against a power authority alleging tha t the
power authority was negligent in failing to maintain proper security at its nuclear facility and in failing
to adequately supervise its personnel. The power authority moved to strike the representative’s cause
of action seeking an award of punitive damages. The Supreme Court, Westchester County, agreed:

Ministers and pastors of religious congregations in the Rochester, New York area challenged the New
York State Department of Health’s approval of a Planned Parenthood medical clinic’s application t o
expand its facilities to provide abortion services. The Supreme Court, Albany County, denied the
clinic’s motion to dismiss for lack of standing. The clinic appealed. The Appellate Division, Third
Department, reversed, holding that the ministers and p astors lacked standing to challenge the
approval of the application because they did not demonstrate an injury -in-fact. The court ruled that
the plaintiffs’ allegations, namely that the over -supply of abortion services in the community would
make it more difficult to counsel their congregation about choosing childbirth rather than abortion, did
not constitute an injury within the “zone of interests” relating to the statutory “goals of ‘cost
containment and the promotion of efficiency in health care plannin g.” [66] 9. Idem
In re Versailles Foundation, Inc. [67] The plaintiff foundation s ought to compel a decedent’s executor to deliver specific property that which
the foundation claimed was an enforceable charitable donation. The foundation offered letters from
the decedent, thanking officers of the foundation for luncheons and other ente rtainment, as proof of a
charitable contract. The Surrogate Court, New York County, denied the foundation’s motion, and the
foundation appealed. The Appellate Division, First Department, affirmed, noting that thank you letters
could not be considered cle ar and convincing evidence of a charitable contract. The court found that
“wining and dining” of a potential donor could not be considered reliance sufficient to make a
charitable pledge enforceable. In addition, the court noted that the foundation had a lready received a
clock worth $20,000 and cash gift of $500 from the decedent.
10. Wrongful Termination
Ransom v. St. Regis Mohawk Education & Community Fund Inc. [68] Discharged employees of a not -for -profit corporation, organized to provide education and health
services to members of the St. Regis Mohawk Tribe, brought an action against the corporation and its
directors, who were also the Tribal Chiefs, claiming that t heir dismissal was not in compliance with the
Tribe’s employment policy and procedures manual. The Supreme Court, Franklin County, directed the
corporation to reinstate the employees. The corporation appealed. The Appellate Division, Third
Department, r eversed and remitted. On remand, the Supreme Court determined that the corporation
did not enjoy sovereign immunity. On appeal, the Appellate Division, Third Department, reversed and
dismissed the petition. The employees appealed. The Court of Appeals held that: (1) as a tribal
entity, the corporation enjoyed sovereign immunity; (2) the incorporation by reference in the
corporate charter of the statutory power to sue and to be sued did not satisfy the requirement of
express and unequivocal waiver of im munity; and (3) the directors acted within the scope of their
authority and were thus protected by the corporation’s immunity.
Non -New York Insurance Decisions
11. U.S. District Court for District of New Mexico
Servants of the Paraclete, Inc. v. Great American Insurance Co. [69] This case arises out of a dispute between an insured and its insurers over the duty to defend and the
duty to indemnify. In 1992, the plaintiff nonprofit organization was sued in state court actions by
children in Minnesota and New Mexico for sexual abuse committed by a former priest at the
organization. As a result of the insurers’ refusal to pay losse s incurred in the lawsuits, the
insured/plaintiff filed a declaratory action alleging that Great American Insurance Company, Catholic
Mutual Relief Society of America, and St. Paul Fire and Marine Insurance Company breached their
respective duties to defen d and to indemnify the plaintiff. The insurers moved for summary judgment.

The district court addressed many issues such as trigger of coverage, duty to defend, and duty to
indemnify. The district court denied St. Paul’s motion for summary judgment that it had no duty to
defend the plaintiff in the Minnesota actions but granted the summary judgment motion that St. Paul
had no duty to defend in the New Mexico actions, since the plaintiff had failed to show that the
claimants had alleged any “injury” during the period of the policy. The court held that Catholic Mutual
had a duty to defend, but not a duty to indemnify, since the underlying actions did not allege that
“bodily injury” occurred during the period of coverage. Finally, the court ruled that becau se Great
American’s policies were unclear, and thus ambiguous, Great American had a duty to defend. Further,
because there was a sufficient nexus between the alleged negligence and the injuries claimed, Great
American had a duty to indemnify.
12. U.S. Cou rt of Appeals, Fifth Circuit
Tichenor v. Roman Catholic Church of the Archdiocese of New Orleans [70] In this case, a priest was accused of sexually molesting a child, an d also of defamation and invasion of
privacy by marketing videotapes and/or photographs of the plaintiff. The priest claimed that the
insurance company that insured his church had a duty to defend him. The court held that the
insurance company had a duty to defend its insured, which included the church, directors, member
churches, officers, and any employee working within “the scope of his duties.” The court held that,
because the priest’s actions were clandestine activities not within the scope of his e mployment, the
insurance company had no duty to defend the priest.
13. U.S. District Court for District of Minnesota, U.S. Court of Appeals, Eighth Circuit
Diocese of Winona v. Interstate Fire & Casualty Co. [71] This case involves a priest who sexually abused children while he was employed by the plaintiff
diocese from 1958 to 1985. The insured diocese and archdiocese sued the defendant insurance
companies for coverage for underlying negligent and reckless supervision. The insurance companies
argued that they did not have a duty to either defend or indemnify the churches because the acts of
the priest were not covered by t he insurance policies for the following reasons: (1) the policies did
not cover intentional acts [by the priest] or acts which were expected by the plaintiffs; and (2) the act
in question was a single occurrence which only triggered the insurance policy a t the outset of the
abuse. The district court ruled that the priest’s acts did not preclude the churches from coverage
because the churches did not intentionally direct the priest to conduct the sexual abuse, and that the
knowledge of the priest’s past ac ts of abuse did not lead them to expect that the priest would continue
to abuse children. Further, the district court concluded that the sexual abuse was a single continuous
act which caused actual harm during the policy period. Therefore, the defendant insurance companies
had the duty to indemnify the plaintiff churches. Both parties appealed, and the Court of Appeals for
the Eighth Circuit affirmed in part and reversed in part, holding that: (1) the sexual abuse was
“expected” by the insureds, and thu s the victim’s claims did not involve a covered “occurrence”;
(2) the diocese was not liable to the archdiocese’s insurer for reimbursement of that insurer’s
overpayments to the archdiocese; and (3) the insureds were not entitled to coverage for litigation
expenses, either in the underlying action or in the appeal.
Notes
{1] Jerold Oshinsky is a partner with the law firm of Dickstein Shapiro Morin & Oshinsky LLP in
Was hington, D.C. This paper was prepared with substantial input from Gheiza M. Dias, an
International Legal Advisor at the firm. The firm (which also has offices in New York) represents
policyholders in insurance coverage cases nationwide. Mr. Oshinsky is co -author of Jerold Oshinsky
and Theodore A. Howard, Practitioner’s Guide to Litigating Insurance Coverage Actions (2d ed. 1998 &
Supps.).

Hartford Accident & Indem. Co., No. CV88 -0351982 (Conn. Super. Ct. Feb. 24, 1993); Am. Motorists
Ins. Co. v. Rust -Oleum Corp., No. 36,474 (Ind. Cir. Ct., Johnson City Mar. 26, 1991) (court applies
Illinois law); Terminix Int’l Co. v. Md. Cas. Co., No. 88 -2186 -4/B (W.D. Tenn. Apr. 9, 1991), aff’d on
other grounds, 956 F.2d 270 (6th Cir. 1992).
[36] E.g., Gilbert Spruance Co. v. Pa. Mfrs.’ Ass’n Ins. Co., 134 N.J. 96, 98, 629 A.2d 885, 886
(1993) (“Gilbert Spruance”) (“when the parties to the insurance contract can reasonably foresee that
a New Je rsey waste site will receive the insured’s waste products, New Jersey law should dictate the
proper interpretation of the insuring agreement.”); Am. Cas. Co. v. Gen. Metals of Tacoma, Inc., No.
C92 -5192B (W.D. Wash. Feb. 8, 1994); CPC Int’l, Inc. v. Northb rook Excess & Surplus Ins. Co., 839 F.
Supp. 124 (D.R.I. 1993) (follows Gilbert Spruance), writ of mandamus refused, No. 94 -1056 (1st Cir.
Jan. 28, 1994), aff’d, 46 F.3d 1211 (1st Cir. 1995); A. Johnson & Co. v. Aetna Cas. & Sur. Co., 741
F. Supp. 298 (D. Mass. 1990), aff’d, 933 F.2d 66 (1st Cir. 1991); Champion Int’l Corp. v. Aetna Cas. &
Sur. Co., No. 90 -2-09616 -5 (Wash. Super. Ct. Sept. 27, 1991), reconsideration denied (Oct. 21,
1991); Joy Techs., Inc. v. Liberty Mut. Ins. Co., 187 W. Va. 742, 421 S.E. 2d 493 (1992);. But see NL
Indus., Inc. v. Commercial Union Ins. Co., 65 F.3d 314 (3d Cir. 1995) (suggesting another standard
applies in New Jersey in non -environmental cases); Butler & Smith Inc. v. Liberty Mut. Ins. Co., No.
93 -4494 (DRD) (D.N.J. Sept. 17, 1995) (emphasis on location of site diminished where insured risk is
multistate in nature); Ins. Co. of N. Am. v. Asarco, Inc., No. L -6164 -93 (N.J. Super. Ct. Jan. 17,
1997) (location of particular site is less important where sites at issue are multi state in nature).
[37] E.g., Imperial Cas. & Indem. Co. v. Kingsbury Mach. Tool Corp., No. C -92 -348 -L (D.N.H. Dec.
14, 1993); Monsanto Co. v. Aetna Cas. & Sur. Co., No. 88C -JA -118 (Del. Super. Ct. Oct. 29, 1991)
(court applies Missouri law); E.I. DuPont de Nemours & Co. v. Admiral Ins. Co., No. 89C -AU -99 (Del.
Super. Ct. Oct. 22, 1991) (court applies Delaware law); accord Md. Cas. Co. v. W.R. Grace & Co., No.
88 Civ. 4337 (JSM) (S.D.N.Y. June 8, 1992); Smith v. Hughes Aircraft Co., 783 F. Supp. 1222 (D.
Ariz. 1991), aff’d in part and rev’d in part on other grounds, 10 F.3d 1448 (9th Cir. 1993).
[38] The question of what constitutes “bodily injury” and “personal injury” is discussed below in
Section e.
[39] One example of the definition of an “occurrence” is: “an accident, including injurious exposure
to conditions which results during the policy period in bodily injury or property damage neither
expected nor intended from the standpoint of the insured”.
[40] See, e.g., Nat’l Cas. Ins. Co. v. City of Mt. Vernon, 128 A.D.2d 332, 515 N.Y.S.2d 267 (2d.
Dep’t. 1987) (personal injury claim for false imprisonment over a period of years triggers multiple
polici es).
[41] The appeals court reversed the district court decision and concluded that the acts committed by
the priest were expected, and thus no occurrence was found.
[42] See, e.g., Aetna Cas. & Sur. Co. v. Abbott Labs., Inc., 636 F. Supp. 546 (D. Conn. 1986)
(pharmaceuticals); Sandoz, Inc. v. Employers’ Liab. Assurance Corp., 5 54 F. Supp. 257 (D.N.J. 1983)
(pharmaceuticals); First State Ins. Co. v. Minn. Mining & Mfg. Co., No. C3 -94 -12780 (Minn. Dist. Ct.
July 14, 1997) (breast implants).
[43] Some claims -made policies also exclude retroactive coverage, and, therefore, only provide
coverage for claims which not only are made during the policy period but further require that the
events giving rise to the claim also fall within the policy p eriod for coverage to attach.
[44] Other policies may specifically exclude coverage for “expected or intended” damage or injury,
or in other ways limit coverage for intentional acts. See, e.g., Quality Painting, Inc. v. Truck Ins.
Exch., 26 Kan. App. 2d 473, 988 P.2d 749 (1999) (intentional acts exclusion bars coverage for sexual
harassment claim against painting company).

Aetna Cas. & Sur. Co., 45 Cal. App. 4th 1, 52 Cal. Rptr. 2d 690 (1996), review denied, 1996 Cal.
LEXIS 4708 (Cal. Aug. 21, 1996); Zuri ch Ins. Co. v. Northbrook Excess & Surplus Ins. Co., 145 Ill.
App. 3d 175, 494 N.E.2d 634 (1986), aff’d, 118 Ill. 2d 23, 514 N.E.2d 150 (1987); J.H. France
Refractories Co. v. Allstate Ins. Co., 626 A.2d 502 (Pa. 1993).
[53] See Ins. Co. of N. Am. v. Forty -Eight Insulations, Inc., 451 F. Supp. 1230, 1242 -43 (E.D. Mich.
1978) (“Forty -Eight Insulations”), aff’d, 633 F.2d 1212, 1225 -26 (6th Cir. 1980), clarified and aff’ d on
reh’g, 657 F.2d 814 (6th Cir. 1981); Stonewall, 73 F.3d 1178; EEOC v. S. Publ’g Co., 894 F.2d 785,
791 (5th Cir. 1990) (court follows Forty -Eight Insulations in sexual harassment coverage dispute);
Reichhold Chems., Inc. v. Hartford Accident & Indem. Co., No. X03 -CV 880858 845, 1999 Conn.
Super. LEXIS 2066 (Conn. Super. Ct. Feb. 11, 1999); Owens -Illinois, Inc. v. United Ins. Co., 138 N.J.
437, 650 A.2d 974 (1994).
[54] 283 A.D.2d 234, 726 N.Y.S.2d 615 (1st Dep’t 2001).
[55] Id. at 236, 726 N.Y.S.2d at 617 (alteration in original) (quoting Morgan v. State, 90 N.Y.2d 471,
484, 685 N.E.2d 202, 207 -08, 662 N.Y.S.2d 421, 426 -27 (1997)).
[56] Id. (quoting Turcotte v. Fell, 68 N.Y.2d 432, 439, 502 N.E.2d 964, 968, 510 N.Y.S.2d 49, 53
(1986)).
[57] 262 A.D.2d 131, 691 N.Y.S.2d 502 (1st Dep’t 1999).
[58] 202 A.D.2d 284, 609 N.Y.S.2d 195 (1st Dep’t 1994).
[59] 180 A.D.2d 525, 580 N.Y.S.2d 246 (1st Dep’t 1992), rev’d, 81 N.Y.2d 211, 613 N.E.2d 523, 597
N.Y.S.2d 617 (1993).
[60] 158 Misc. 2d 563, 601 N.Y.S.2d 510 (Sup. Ct. Westchester County 1993).
[61] Id. at 566, 601 N.Y.S.2d at 512.
[62] 244 A.D.2d 985, 665 N.Y.S.2d 997 (4th De p’t 1997).
[63] Id. at 986, 665 N.Y.S.2d at 999.
[64] 149 Misc. 2d 11, 562 N.Y .S.2d 360 (Sup. Ct. Cortland County 1990).
[65] 203 A.D.2d 826, 611 N.Y.S.2d 61 (3d Dep’t 1994).
[66] Id. at 828, 611 N.Y.S.2d at 62 (citation omitted).
[67] 202 A.D.2d 334, 610 N.Y.S.2d 2 (1st Dep’t 1994).
[68] 204 A.D.2d 781, 611 N.Y.S.2d 935 (3d Dep’t 1994), aff’d, 86 N.Y.2d 553, 658 N.E.2d 989, 635
N.Y.S.2d 116 (1995).
[69] 857 F. Supp. 822 (D.N.M. 1994).
[70] 32 F.3d 953 (5th Cir. 1994).
[71] 858 F. Supp. 1407 (D. Minn. 1994), aff’d in part, rev’d in part, 89 F.3d 1386 (8th Cir.
1996). The court decided that a) sexual abuse was expected by insureds, and thus victim’s claims did

not involve a “covered occurrence”; b) the diocese was not liabl e to the archdiocese’s insurer for
reimbursement of that insurer’s overpayments to the archdiocese; and c) the insureds were not
entitled to coverage litigation expenses, either in the underlying or present action.