American Central Insurance Company provided the underlying liability insurance for Barran, who was sued due to his actions as a "pledge-trainer" and president of a college fraternity; the fraternity was sued by Jones, who alleged injuries from "hazing" activities. An umbrella policy was provided by Auto-Owners Insurance Company. American Central filed for a declaratory judgment to be reimbursed for its defense costs by Auto-Owners, the excess liability insurer, and to be relieved from any coverage obligations. American Central asserted that its policy contained an exclusion for any injuries resulting from physical or mental abuse. Note that American Central originally provided defense under a reservation of rights. The trial court found in favor of American Central and Auto-Owners appealed.

Auto-Owners, facing the potential obligation of providing all defense and payment obligations for the claim, argued that, while traditional understanding of physical and mental abuse is excluded, activities such as hazing should not be interpreted as the same form of abuse . In its opinion, hazing is eligible for coverage under the homeowners policy. Auto-Owners also pointed out that the claim included allegations of unintentional injuries along with intentional damage, and unintentional damages are eligible for protection under the homeowner policy.

The higher court reviewed the matter and found that hazing includes willful action against other parties and that it was proper to apply the homeowner policy exclusion to hazing. Further, although some of the injuries may have be unintended, the unintended damages can not be separated from the intentional damages. The higher court affirmed in favor of American Central.

Auto-Owners Insurance Company, Appellant v. American Central Insurance Company, appellee. AlaSCt. No. 1970314, Filed June 25, 1999, Affirmed. CCH 1999 Fire and Casualty Cases, Paragraph 6634.