In April 1991, Lynette Hunter was criminally assaulted in her apartment in a building which was owned and managed by Creative Housing. The latter had secured a liability policy from Mount Vernon Fire pursuant to which Mount Vernon had agreed to pay all sums that its insured became legally obligated to pay because of bodily injury. However, the policy also excluded from coverage "any claim, demand or suit based on Assault and Battery, and Assault and Battery shall not be deemed an accident whether or not committed by or at the direction of the insured."

The trial court found the exclusion to be ambiguous when, as in this case, it was applied to an intentional tort by a third party unrelated to the insured. The company appealed. Two questions were certified to the Court of Appeals of New York, as follows:

(1) Is the language "based on" narrower than the language "arising out of" when used in an insurance policy?

(2) When a third party rather than an insured's employee perpetrates an assault, is the basis of the victim's claim against the insured assault or the negligent failure to maintain safe premises?

The court said that "nothing can obscure the fact that Hunter's claim is based upon an assault for which coverage is excluded."

The court decided further that there was no significant difference between the meaning of the phrases "based on" and "arising out of" in the coverage or exclusion clauses of an insurance policy. In addition, the court said that the language of the exclusion encompasses claims based on assaults by the insured's employees or unrelated third parties. Coverage in either case was excluded.

Mount Vernon Fire Insurance Company v. Creative Housing Ltd., et al.-Court of Appeals of New York-June 11, 1996-668 North Eastern Reporter 2d 404.