Intentional Acts Exclusion: When Insurers Deny Coverage

How does the intentional acts exclusion work in a Minnesota policy?

When a Minnesota policy excludes injury “expected or intended” by the insured, the insurer must show that the insured “intended the harm itself, not merely that the insured generally intended to act,” or expected the harm with a certainty greater than ordinary foreseeability. The insurer carries the burden of proving that the exclusion applies.

In American Family Insurance Co. v. Walser, 628 N.W.2d 605 (Minn. 2001), two high school students grabbed a classmate’s ankles while he hung from a basketball rim, and he injured a finger in the fall. The homeowner’s policy excluded injury “expected or intended from the standpoint of the insured.” The Minnesota Supreme Court held: “In order for coverage to be excluded as intentional, a court must find that the insured acted with ‘specific intent to cause’ harm and that the insured ‘intended the harm itself, not merely that the insured generally intended to act.’” The pulling was deliberate, but the insured did not intend injury, so the insurer had to defend and indemnify him.

The test has a limit that cuts the other way. The court explained that “a court need only find that the insured intended some harm, not that the insured intended the specific harm that resulted.” A person who meant to cause a minor injury cannot escape the exclusion because the actual injury turned out worse.

The intent test also bears on the coverage grant. Walser held that “where there is no intent to injure, the incident is an accident, even if the conduct itself was intentional,” and that “in analyzing whether there was an accident for purposes of coverage, lack of specific intent to injure will be determinative, just as it is in an intentional act exclusion analysis.” The court added: “We do not conclude or suggest that the scope of coverage for accidents will always coincide with the scope of an exclusion for intentional acts.” An insurer that argues the event was not an “accident” or “occurrence” raises that intent question on the coverage grant, where the insured bears the initial burden of demonstrating coverage.

The burden sits with the insurer. In Travelers Indemnity Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888 (Minn. 2006), the court stated: “While the insured bears the initial burden of demonstrating coverage, the insurer carries the burden of establishing the applicability of exclusions.” Walser added, “We also construe exclusions strictly against the insurer.” A denial letter states the insurer’s position, and in a coverage case the insurer would have to prove any exclusion it relies on. On the “expected” half of the exclusion, Bloomington Steel, quoting an earlier decision, said “expected” damage requires “a certainty of harm on the part of the insured greater than general standards of foreseeability used to impose liability on the insured” and that the court has “equated ‘expected’ damage with ‘reckless’ conduct.”

When will a Minnesota court infer intent to injure?

A Minnesota court infers intent to injure, even when the insured denies it, only when the insured acted in a calculated and remorseless way or knew or should have known that harm was substantially certain. When the evidence would let a fact-finder find no intent, the question goes to the trier of fact.

Walser stated the standard: “the inference of intent to injure as a matter of law arises when the insured acted in a calculated and remorseless manner or when the insured’s actions were such that the insured knew or should have known that a harm was substantially certain to result from the insured’s conduct.” The court added that “The mere fact that the harm was a ‘natural and probable consequence’ of the insured’s actions is not enough to infer intent to injure.” It also said, “There is no bright line rule as to when a court should infer intent to injure as a matter of law.”

Cases where the court has drawn the inference include a planned armed robbery with loaded weapons and shots fired into a truck the insured knew was occupied. Walser summarized them as cases in which the insureds acted with “deliberate and calculated indifference to the risk of injury.” Teenagers “goofing around” in a gym did not meet that standard; the record showed that neither had seen anyone hurt in a fall from a rim. My page on the expected or intended injury exclusion walks through the shooting case.

The court restated the rule in B.M.B. v. State Farm Fire & Casualty Co., 664 N.W.2d 817 (Minn. 2003). It described two routes: “Under this subjective standard, the intent to injure may be established: (1) by proof of an actual intent to injure, or (2) by inferring intent as a matter of law.” It also stated the counterweight: “However, in situations where the evidence permits the trier of fact to infer that the insured did not intend his conduct to cause injury, whether the insured intended to injure his victim will be put to the trier of fact.” That can happen when an insured’s actions are “more in the nature of an instinctive reflex or a sudden impulsive defensive reaction to a provocative situation.” B.M.B. itself answered a narrower question. It held that where coverage is sought for injury from an insured’s “nonconsensual sexual contact with another,” and a genuine fact issue exists whether the acts were “unintentional” because of mental illness, “the trial court shall submit the issue to the jury.”

Whose intent counts when the insured is a company?

When a policy excludes injury expected or intended by “the insured” and contains a separation-of-insureds clause, a Minnesota court looks at the company’s own intent and expectation. In Bloomington Steel, the Minnesota Supreme Court did not reach whether the intent of an agent, for whose acts the company is vicariously liable, is imputed to the company for that exclusion.

In Bloomington Steel, the company’s sole shareholder, director, and officer struck a worker from another company with a piece of wood. The worker sued him for assault and battery and sued the company for respondeat superior (employer liability for an employee’s acts at work) and negligent retention and supervision. The owner later pleaded guilty: “Reiners eventually pleaded guilty to first-degree assault for his actions.” The insurer argued that his intent was the company’s intent. The Minnesota Supreme Court disagreed: “Because it is Bloomington Steel that seeks coverage here, the exclusion for bodily injury expected or intended by ‘the insured’ is limited to bodily injury expected or intended by Bloomington Steel itself.”

The wording of the exclusion decided the case. The court observed that “Travelers could have made clear that it was not insuring Bloomington Steel for the risk of an intentional act committed by Reiners in at least two different ways.” The two ways were excluding injury expected or intended by “an” insured or “any” insured. The court said that wording would have barred the company’s coverage for the owner’s acts to the extent he was also insured under the policy. It distinguished fire coverage, where “such clauses conflict with the Minnesota standard fire insurance policy and are therefore unenforceable.” It added: “There is no comparable standard CGL policy language under Minnesota law.”

The company’s own knowledge still matters. In discussing tort liability, the court said that when an agent “acted on behalf of the corporation,” the agent’s intent is imputed to the corporation. Applying the corporate-law principles Travelers cited, the court said the company “is charged with knowledge of Reiners’ acts, if any, committed in the course of his employment and within the scope of his authority, and is charged with Reiners’ intent when Reiners acted on its behalf.” It set a high bar for “expected” injury: “showing that an insured ‘expected’ the injury suffered requires more than showing sufficient ‘foreseeability’ to maintain a negligence action against the insured.” The court sent the company’s own expectation back to the fact-finder to decide “based on the knowledge attributed to Bloomington Steel” under those principles. In a footnote, it said it did “not reach” whether the intent of an agent, for whose acts a company is vicariously liable, “can be imputed to the insured for purposes of the ‘expected or intended injury’ exclusion.”

I suggest pulling three things from the policy before you answer a denial, because each can change the result:

1. whether the exclusion says “the insured,” “an insured,” or “any insured”;
2. whether the policy has a separation-of-insureds clause;
3. who the policy lists as insureds (the company, its owners, officers, employees).

If the same incident triggers a customer’s indemnity demand, my pages on contract indemnity for intentional conduct and on additional-insured endorsements cover that side.

What must an insurer’s denial letter tell you?

Under Minnesota’s claim-practices statute, an insurer that denies a claim based on an exclusion must name the exclusion and state the basis for the denial, after a reasonable investigation. The Department of Commerce enforces those standards, and the statute does not change what your policy says.

Minn. Stat. § 72A.201, subd. 8 lists acts that “constitute unfair settlement practices.” They include “(1) denying a claim or any element of a claim on the grounds of a specific policy provision, condition, or exclusion, without informing the insured of the policy provision, condition, or exclusion on which the denial is based” and “(2) denying a claim without having made a reasonable investigation of the claim.” A denial must also include “(i) the basis for the denial,” along with the insurer’s claim contact, “the claim number and the policy number of the insured.”

Enforcement runs through the state. Under subdivision 1, “The commissioner may, in accordance with sections 72A.22 to 72A.25, seek and impose appropriate administrative remedies, including fines, for (1) a violation of this section or the rules adopted pursuant to this section.” The same subdivision adds that “No individual violation constitutes an unfair, discriminatory, or unlawful practice in business, commerce, or trade for purposes of section 8.31.” Under subdivision 2, the Department of Commerce considers “all pertinent facts and circumstances” when it decides what action to take. Subdivision 10 states: “Nothing in this section abrogates any policy provisions.”

Denial letters can rest on several grounds at once. One denial letter I received on a client’s behalf quoted the expected-or-intended exclusion. Its stated grounds were the absence of an “occurrence” and a separate exclusion. It added that alleged intentional acts may not be covered, and it reserved the right to raise more defenses later. I suggest answering each stated ground in writing, because the insurer carries the burden on each exclusion it relies on, while the insured bears the initial burden of demonstrating coverage, including an “occurrence.”

How does the duty to defend work when a lawsuit mixes intentional and negligence claims?

A Minnesota liability insurer owes a defense when any part of a claim against you is arguably covered. To refuse, it must show that each claim “clearly falls outside” the policy, so a negligence count can require a defense even when other counts allege intentional harm.

In Jostens, Inc. v. Mission Insurance Co., 387 N.W.2d 161 (Minn. 1986), the court stated: “A duty to defend an insured on a claim arises when any part of the claim is ‘arguably’ within the scope of the policy’s coverage”. In Meadowbrook, Inc. v. Tower Insurance Co., 559 N.W.2d 411 (Minn. 1997), employees sued their employer on many claims, including harassment, defamation, assault, and battery. The court explained that “The duty to defend is broader than the duty to indemnify,” and that “An insurer seeking to establish that it does not have a duty to defend must show that each claim asserted in the lawsuit ‘clearly falls outside’ the policy.”

The complaint’s allegations drive the answer, not the insurer’s view of the merits. Meadowbrook stated: “An insurer’s obligation to defend its named insured does not depend on the merits of the claim asserted but on whether the allegations of the complaint against the insured state a cause of action within the coverage afforded by the policy.” Facts can change that only in one situation: “Only when actual facts within the insurer’s knowledge clearly establish the existence or nonexistence of an obligation to defend, will this court hold that the complaint is not controlling.”

A negligence claim against the company, such as negligent retention or supervision, alleges carelessness by the company, and Walser ties the exclusion to an intent to harm. In Bloomington Steel, the insurer defended the company against negligent retention and supervision claims while it litigated coverage. The court there did not decide whether a negligent retention claim based on an employee’s intentional act is itself a covered “occurrence.”

The defense can end. Meadowbrook held “that an insurer who undertakes an insured’s defense under a reservation of rights can withdraw its defense once all arguably covered claims have been dismissed with finality”. The court also explained that “Even though the insurer agreed to defend the entire claim against the insured, its duty extended only to those claims arguably covered by the policy,” and that once the insurer settled and paid those claims, “it had completely performed its contractual duty.” My page on the duty to defend and indemnify covers the two duties side by side. For defamation claims, my page on the knowingly false publication exclusion covers a related exclusion. In Meadowbrook, a separate employment exclusion removed the harassment claim from coverage; my page on employment practices liability insurance covers coverage written for employee claims.

What does a reservation of rights mean for your defense?

A reservation of rights means the insurer defends you while keeping the right to deny payment later. Under a 2026 Minnesota Court of Appeals decision, when coverage turns on the same facts the lawsuit will decide, you may choose independent counsel at the insurer’s expense.

The Court of Appeals decided Fabyanske Westra Hart & Thomson PA v. Western National Mutual Insurance Co., 37 N.W.3d 625 (Minn. App. 2026). It quoted the Minnesota Supreme Court’s description of the practice: “When an insurer has a duty to defend a liability claim for which it questions coverage, the insurer must expressly inform its insured that it accepts defense of the claim subject to its right to later contest coverage of the claim based on facts developed at trial.” In Fabyanske, the insured’s own law firm objected to the reservation in writing and asked the insurer to withdraw it; when the insurer refused, the firm appeared in the lawsuit to monitor the defense. The court held: “A conflict of interest entitling an insured to independent counsel exists when the insurer defends under a reservation of rights and the facts to be determined in the underlying action are the same facts upon which coverage depends.” It added: “When an actual conflict of interest exists, an insurer’s duty to defend ‘transforms’ into a duty to reimburse, and the insured has the right to select independent counsel at the insurer’s expense.”

Intent questions raise the same conflict. Fabyanske relied on a footnote in Jostens, where the insurer said its policy “might cover wrongful discharge and fraud if unintentional.” The Minnesota Supreme Court explained the problem: “So, at the Wepler trial, it would be to Jostens’ advantage to show its conduct was unintentional while it would be to Mission’s advantage to show it was intentional.”

The rule is not automatic. Fabyanske stated that its decision “requires a case-by-case determination to assess whether the reservation of rights creates an actual conflict of interest.” Fabyanske involved an additional insured and a question of whose negligence caused the injury, not an intentional acts exclusion. Your reservation letter may rely on the intentional acts exclusion. If it does, I suggest answering it in writing and asking whether the insurer will pay independent counsel, because Fabyanske ties that right to the facts the lawsuit will decide.

How does a Minnesota business challenge a coverage denial in court?

A Minnesota business can ask a court to declare what its policy covers. The declaratory judgment act lets a court construe a written contract, and an insured can sue before large defense costs build up. An insured that prevails on a commercial policy recovers interest on amounts due, except where the interest statute excludes the policy or the insurer, as with workers’ compensation, a township mutual fire insurance company, or the joint underwriting association.

Under Minn. Stat. § 555.01, “Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.” Minn. Stat. § 555.02 lets a person interested under a written contract have the court determine “any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder.” Bloomington Steel described the relationship this way: “an insurance policy is a contract between insurer and insured.” Jostens confirmed the timing option: “any insured can, of course, bring a declaratory judgment action to resolve the duty to defend dispute before substantial defense costs are incurred.”

Fees and interest follow a breach. Meadowbrook stated that “attorney fees are recoverable in a declaratory judgment action if the insured proves that the insurer breached a contractual duty,” and it cited an earlier decision for the rule that fees are recoverable “only if there is a breach of a contractual duty, ‘usually by wrongfully refusing to defend the insured’.” The court limited the award there to fees incurred during the period the insurer was in breach. Under Minn. Stat. § 60A.0811, subd. 1, the interest rule reaches a “commercial or professional insurance policy or contract,” with listed exceptions that include workers’ compensation and “a policy or contract issued by a township mutual fire insurance company operating under chapter 65A.” The same subdivision limits the insurers it reaches: “Insurer does not include the joint underwriting association operating under chapter 62F or 62I; or a township mutual fire insurance company operating under chapter 65A.” Subdivision 2 provides: “(a) An insured who prevails in any claim against an insurer based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments is entitled to recover ten percent per annum interest on monetary amounts due under the insurance policy, calculated from the date the request for payment of those benefits was made to the insurer.” It also states that “(b) Punitive damages or damages for nonmonetary losses are not recoverable under this section.” Subdivision 3 applies the rule to “a court action or arbitration proceeding, including an action seeking declaratory judgment.”

My pages on declaratory judgment actions and on filing a declaratory judgment action in Minnesota cover the procedure.

How does a Miller-Shugart settlement work after a denial?

In a Miller-Shugart settlement, the insured agrees to a judgment that the injured claimant may collect only from insurance. In Miller, the Minnesota Supreme Court allowed one while the insurer contested coverage, but the claimant must prove the settlement reasonable and prudent, and the claimant collects nothing from the insurer if the insurer wins on coverage.

In Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982), the insurer was litigating coverage in a declaratory judgment action when the insureds settled the injury claim. They settled by stipulating to a judgment collectible only from insurance. The court reasoned: “While the defendant insureds have a duty to cooperate with the insurer, they also have a right to protect themselves against plaintiff’s claim.” It held: “On the facts of this case we hold, therefore, that the insureds did not breach their duty to cooperate with the insurer, which was then contesting coverage, by settling directly with the plaintiff.” Those facts included notice to the insurer, Milbank: counsel for the insureds twice “advised Milbank they were negotiating a settlement with plaintiff’s attorney” and invited the insurer to take part, and the court noted, “They also advised Milbank of what they were doing.”

The settlement has two checks. First, “We start with the general proposition that a money judgment confessed to by an insured is not binding on the insurer if obtained through fraud or collusion.” Second, “The burden of proof is on the claimant, the plaintiff judgment creditor, to show that the settlement is reasonable and prudent.” In Miller, the court measured that standard this way: “The test as to whether the settlement is reasonable and prudent is what a reasonably prudent person in the position of the defendant would have settled for on the merits of plaintiff’s claim.”

The risk falls on the claimant if coverage fails. The court said that “the insurer escapes the risk if it should be successful on the coverage issue, and, in that event, it is plaintiff who loses.” In Bloomington Steel, the injured worker asserted, and the insurer did not contest, that he and the company entered a Miller-Shugart agreement after the trial court ruled for the insurer. The court of appeals affirmed, and the Minnesota Supreme Court later wrote, “we reverse the court of appeals and remand for further proceedings.” I suggest reading the settlement’s collection terms with care before signing, because the company’s protection from paying the judgment comes from those terms.

What changes when the denial is on a property claim?

Minnesota’s insurer standard-of-conduct statute reaches a written policy that pays proceeds directly to your business, such as property coverage. A court may add taxable costs, including attorney fees incurred to establish the insurer’s violation, when the insurer lacked a reasonable basis to deny and knew it or recklessly disregarded it. The statute does not reach a refused defense.

Minn. Stat. § 604.18, subd. 1 defines its scope: “(a) “Insurance policy” means a written agreement between an insured and an insurer that obligates an insurer to pay proceeds directly to an insured.” It then excludes liability coverage obligations: “Insurance policy does not include provisions of a written agreement obligating an insurer to defend an insured, reimburse an insured’s defense expenses, provide for any other type of defense obligation, or provide indemnification for judgments or settlements.”

Under subdivision 2, the insured must show “(1) the absence of a reasonable basis for denying the benefits of the insurance policy” and “(2) that the insurer knew of the lack of a reasonable basis for denying the benefits of the insurance policy or acted in reckless disregard of the lack of a reasonable basis for denying the benefits of the insurance policy.” For a loss the insurer suspects was set on purpose, one sentence matters: “(c) An insurer does not violate this subdivision by conducting or cooperating with a timely investigation into arson or fraud.”

Subdivision 3 sets the award: “(1) an amount equal to one-half of the proceeds awarded that are in excess of an amount offered by the insurer at least ten days before the trial begins or $250,000, whichever is less” and “(2) reasonable attorney fees actually incurred to establish the insurer’s violation of this section.” It limits and caps fees: “Attorney fees may be awarded only if the fees sought are separately accounted for by the insured’s attorney and are not duplicative of the fees for the insured’s attorney otherwise expended in pursuit of proceeds for the insured under the insurance policy. Attorney fees must not exceed $100,000.”

The procedure has its own sequence. Under subdivision 4, “(a) Upon commencement of a civil action by an insured against an insurer, the complaint must not seek a recovery under this section.” The insured later moves to amend, with affidavits, and the court decides whether prima facie evidence supports the claim. Subdivision 4 also states: “(c) An award of taxable costs under this section is not available in any claim that is resolved or confirmed by arbitration or appraisal.”

Under Minn. Stat. § 65A.01, subd. 1, a fire policy on property in this state must, except as other listed statutes provide, “conform as to all provisions, stipulations, and conditions” with the Minnesota standard fire policy. The standard policy’s terms in subdivision 3 bar a suit on the policy unless the insured has complied with the policy’s requirements and starts the suit within a fixed time after the loss.

These statutes may not reach a policy from a township mutual fire insurance company: under Minn. Stat. § 67A.25, subd. 2, those companies are “excluded from all provisions of the insurance laws of this state” unless a law is “expressly designated” as “applicable to township mutual fire insurance companies.”

Next Steps After a Denial

A denial under the intentional acts exclusion is the insurer’s position, and Minnesota law gives your business several ways to test it. I suggest these steps, in this order, because each one builds the record the next one uses:

1. Getting the complete policy, with its endorsements, from your broker, because the exclusion’s exact words decide whose intent counts.
2. Reading the denial letter against Minn. Stat. § 72A.201, subd. 8 and answering each stated ground in writing with the facts on intent and expectation, because the insurer carries the burden on each exclusion.
3. Comparing each count of the complaint to the policy, because one arguably covered count requires a defense.
4. Asking, if the insurer defends under a reservation of rights, whether the coverage question turns on the same facts the lawsuit will decide, because that overlap is what supports independent counsel under Fabyanske.
5. Weighing a declaratory judgment action against a Miller-Shugart settlement, because the two routes carry different fee, interest, and risk rules.
6. Checking, on a property claim, the policy’s time limit for suing, because a fire policy governed by Minn. Stat. § 65A.01 bars a suit unless the policy’s requirements are met and the suit starts within that time. A policy from a township mutual fire insurance company falls under the Minn. Stat. § 67A.25, subd. 2 exclusion described above.

If you would like me to analyze whether the exclusion reaches the claim against your company, email [email protected] with a short description of the claim and the name of the insurer. More pages on how contract terms and insurance interact are in my Minnesota contracts practice materials.