On June 17, 2019, the First Circuit held that an insurer’s duty to defend was triggered because the underlying complaint set forth claims that required a showing of intent as well as claims that sought recovery for conduct that “fits comfortably within the definition of an ‘accident.’” In Zurich American Ins. Co v. Electricity Maine, LLC, Zurich sought declaratory judgment that, under a D&O policy, it had no duty to defend the insured, Electricity Maine, an electrical utility company being sued in the underlying class action. Zurich argued it had no duty to defend because the underlying complaint failed to allege that Electricity Maine engaged in conduct that qualified as an “occurrence” or that caused “bodily injury” under the terms of the policy. The First Circuit disagreed.
The D&O policy stated that Zurich “has a duty to defend Electricity Maine against any lawsuit that seeks damages for ‘bodily injury’ caused by an ‘occurrence.’” The policy defined an “occurrence” as “an accident . . .” and under Maine law an accident is “commonly understood to mean . . . an event that takes place without one’s forethought or expectation . . . .” The Court held that, because the underlying complaint asserted claims for negligence and negligent misrepresentation, in addition to intentional torts, the conduct upon which recovery was sought fell within the definition of an “accident” and therefore qualified as an “occurrence” triggering the duty to defend. Second, the Court held that, although the underlying complaint did not allege that Electricity Maine’s conduct caused “bodily injury,” the complaint did not need to do so to fall within the risk insured and trigger a duty to defend. Instead, because the alleged conduct could result in bodily injury due to emotional distress, the allegations fell within the risk insured and Zurich has a duty to defend.