The Kentucky Supreme Court, on first impression, addressed a property exclusion involving damage intentionally caused by an insured whose mental capacity was in question. See Foreman v. Auto Club Property-Casualty Insurance Co., 617 S.W.3d 345 (Ky. 2021).
The Kentucky Supreme Court noted that courts generally hold that intentional-act exclusions do not apply in situations where the insured was suffering from a lack of mental capacity at the time of the act in question. The insurance policy required the insured’s conduct to be objectively judged. Nevertheless, the Court held that an objective analysis required the Court to ask what loss, when judging the circumstances objectively could the insured reasonably expect to result from his intentional acts. Therefore, the insured was entitled to litigate the question of lack of capacity in support of the insurance claim. Logic of the Court was somewhat confusing. On the one hand, the insurer’s policy embraced an objective standard for determining intent, provided that the reasonable likelihood of damage needed to be judged from the perspective of the insured, who may have been mentally incapable of appreciating the consequences of his actions. However, the whole purpose of an objective standard was to eliminate the insured’s objective statement of mind from consideration when determining coverage. Thus, it was unclear in what sense the insured’s mental capacity was relevant to what an objective person would think.