Section 533, Denial of Insurance Coverage for Willful Acts

California Insurance Code section 533 states that "An insurer is not liable for a loss caused by the willful act of the insured . . . ." Section 533 is intended to apply for public policy purposes to discourage willful acts, whether or not the exclusion is specifically stated in the insurance policy. So, you might ask, "what is a willful act?". The answer to that question depends on the facts and circumstances of each case.

For example, it has been held that shooting a person with a gun is willful. It has also been held that shooting a person with a gun is not willful. Although the act of pulling the trigger might be willful, an accidental shooting with a gun believed to be unloaded very well might not be willful as that term is intended under section 533. It has been variously held that for section 533 to exclude coverage the wrongdoer must have had a degree of foreknowledge or belief that the act was done for the purpose of causing damage or injury, or with the knowledge or belief that damage or injury was highly probable or substantially certain to result. However, the section 533 exclusion can be triggered even if the specific type of damage or injury, or the degree of damage or injury was not necessarily intended.

Negligent or reckless misconduct do not trigger the section 533 exclusion. However, in some jurisdictions and for some causes of action, the degree of culpability that must be shown to establish a claim of reckless misconduct may approach or satisfy the section 533 willful misconduct culpability standard. Additionally, you still must carefully read the insurance policy--the wording of the policy may expressly exclude coverage for specified wrongful conduct that is less culpable than willful.

If a lawsuit is filed against an insured defendant, and the complaint alleges only a claim against the defendant which requires plaintiff to prove willful or intentional misconduct in order for the plaintiff to prevail, section 533 will prohibit coverage because the plaintiff can only prevail of the misconduct is willful or intentional. Additionally, since there can be no coverage for liability, there also is no duty to defend. On the other hand, most complaints allege multiple causes of action which carry or allege differing degrees of culpability. It is likely that liability under one or more of the causes of action will trigger some manner of coverage, even if liability is prohibited for other stated causes of action. In that circumstance the insurer most likely will have a duty to defend against all of the claims, except, perhaps, in the event that the act of defending the willful misconduct claim can be separated from the act of defending the other claims for which there is or may be coverage. However, the insurer may seek to apportion the act of defense between claims that are or may be covered and claims for which coverage is prohibited, and argue that the costs of defense also should be apportioned between the costs that the insurer will and the costs of defense that the defendant will be required to pay.

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