The case is Safeco v. Federal Insurance, 2007 WL 4553690 (Ohio App. 1 Dist.) and it deals with the issue of separation of insureds.

Benjamin White, then 17 years old, attempted to kill Casey Hilmer. He dragged the 13-year-old into the woods and stabbed her repeatedly. White pleaded guilty to attempted murder and felonious assault. He was sentenced to 10 years in prison.

 The Hilmers sued White and his parents claiming that the Whites had been negligent for failing to properly supervise their son and for entrusting him with a dangerous instrument. The jury awarded $6.5 million in compensatory damages and determined that Lance and Diane White were responsible for 70% of that amount. The Whites had two homeowner policies and two umbrella policies. One homeowner policy was issued by Federal Insurance Company; one umbrella policy was issued by Pacific Indemnity Company. The remaining policies were issued by Safeco.

 Safeco claimed that it owed no duty to defend or indemnify the Whites. The trial court found that the intentional-tort exclusions in the Safeco policies were rendered ambiguous by the "severability of insurance" clause found in each. The trial court then concluded that Safeco owed coverage on a pro-rata basis with the other policies. Safeco appealed.

 In Safeco's homeowner policy, the term "insured" included relatives if residing in the same household. Liability coverage was provided for a claim or suit against "an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies." "Occurrence" was defined as "an accident which results in bodily injury." Coverage was excluded for bodily injury "which is expected or intended by an insured or which is the reasonably foreseeable result of an act or omission intended by an insured." Bodily injury "arising out of an illegal act committed by or at the direction of an insured" was also excluded. Safeco's umbrella defined "insured" to include any member of the named insured's household. "Occurrence" was defined as "an accident … which results, during the coverage period, in bodily injury..." Additional exclusions included "any injury caused by a violation of penal law or ordinance committed by or with the knowledge or consent of any insured." Additionally "any act or damage which is expected or intended by any insured, or which is the foreseeable result of an act or omission intended by any insured ..." was excluded.

 Both policies contained a "severability of insurance" clause: "This insurance applies separately to each insured. This condition shall not increase our limit of liability for any one occurrence."

 Safeco argued that the attack on Casey Hilmer was not an "occurrence" under its policies because "occurrence" was defined as an "accident" and the attack was not an accident. And, since the attack was not an accident and was committed by an insured, there was no coverage for any insured. But, the appeals court found that Ohio public policy does permit a party to obtain liability coverage for a charge of negligence, even if related to intentional conduct, as long as that party does not commit the intentional act.

The court said that to deny coverage for the negligent acts of an innocent insured, due to the intentional, criminal act of another insured would, in effect deny coverage for the very purpose for which insurance is purchased, i.e., negligence resulting in bodily injury." The exclusions for intentional conduct do not apply to insureds who have been merely negligent, when the policies contain language indicating that coverage applies "separately to each insured."