N.J. Rules Homeowners Policy May Cover Sex Assault

A New Jersey Appellate Court ruled that a homeowners insurance policy may cover a sexual assault by a minor under the age of 14, but only if the assailant didn't realize he was doing harm to the victim.

A three-judge panel ruled on Monday that typically, under the inferred intent rule, an adult understands that a sexual assault causes harm. The law recognizes that a minor of 14 or older is thought to understand this concept. However, courts have not taken the same stance with minors younger than 14, feeling they do not understand that their acts harm an individual.

An attorney for an insurer said the ruling could have ramifications for cases in other states.

The case stems from an attack in 2004 by J.T., a week shy of his 14th birthday, who sodomized a six-year-old girl, identified as P.G., in a home J.T.'s parents rented out.

In the ruling, Judge Joseph F. Lisa wrote, drawing from previous decisions, "Improper sexual behavior by a minor is not necessarily accompanied by an understanding of the effect on the victim.

"For some minors, for example, their only experience with sexual matters may be portrayals in the media of sexual contacts between consenting adults, which may leave them ill-equipped to draw the inference that sexual contact with minors is inherently harmful."

The court said that while insurance indemnification traditionally is denied in cases where there is intentional wrongdoing, there is a desire to see compensation to "innocent victims with insurance proceeds" as long as it does "not condone or encourage intentional wrongful conduct."

The court remanded the case back to the lower court to determine if J.T. did intend to cause the victim harm.

Paul A. Leodori, an attorney with the law firm Leodori & Whelihan based in Medford, N.J., who represents the insurer, Shelby Casualty Insurance Company, based in Birmingham, Ala., said that the case could establish that in this civil matter, the insurer would have a duty to defend J.T. and his father under his homeowners policy. It could also mean that the victim could be compensated under the homeowners policy's limits of $300,000.

The appeals court ruling, while only binding in New Jersey, would allow other courts to cite it in appropriate circumstances, he said.

The ruling, he explained, called for understanding the state of mind of J.T. at the time of the assault and whether he knew that he was harming the victim.

Mr. Leodori said the evidence is clear from J.T.'s confession to police that he knew what he did was wrong.

"To me it is incredible that the kid did not have a subjective understanding that he was causing harm," said Mr. Leodori.

Should Shelby Casualty, which is in liquidation, lose the case, the insurer may still not have to pay the claim, Mr. Leodori noted. He said there is an exclusion in the policy for acts by tenants when there are more than two tenants in the residence. He said the two-family home housed between 18 and 20 people.