American Family Mutual Insurance v. Guzik, 406 Ill. App. 3d 245

American Family issued a homeowners policy to Guzik for a home in Lockport, IL (Aug 31, 2006–Aug 31, 2007) with $500,000 liability limit.
An October 5, 2006 explosion and fire at Guzik’s home destroyed the premises, caused a total loss, and damaged four neighboring properties insured by State Farm.
Guzik had recently lost his job for a DUI; on the day of the incident he was alone inside, the gas line was disconnected, accelerants were found, and investigators concluded the blast resulted from Guzik’s deliberate arson.
American Family filed for declaratory judgment seeking coverage avoidance; Guzik defaulted.
State Farm, as subrogee of neighboring property owners, counterclaimed that American Family owed Guzik coverage for the neighbors’ damages; the trial court granted State Farm’s summary judgment; American Family appealed.
The appellate court reversed, holding Guzik’s acts were not an insured occurrence and that the exclusion for intentional acts barred coverage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the loss qualifies as an accident under the policy’s occurrence definition	Guzik’s intentional act means no accident; coverage requires an accident.	Even if Guzik intended the act, the resulting damage to others may be excluded but not automatically; analysis of occurrence is needed.	The loss is not an accident; occurrence requires an unintentional event.
Whether the policy exclusion for intentional acts applies to damage to surrounding properties	Exclusion should apply broadly to intentional acts, including damage beyond the insured premises.	Exclusion may extend to resulting damages even if different from intended conduct; neighboring property damage falls within exclusion.	Damage to neighboring homes falls within the exclusion for intentional acts.
Whether Guzik’s damages to neighbors can be recovered as a consequence of Guzik’s intentional act under the policy	No recovery because the act was intentional and excluded.	Some courts treat intended but broader damages as excluded; but coverage should not apply here.	Coverage not owed for damages arising from Guzik’s intentional act.

Pekin Ins. Co. v. Dial, 355 Ill.App.3d 516 (2005) (definition of accident; expected vs. accidental injuries)
Lyons v. State Farm Fire & Casualty Co., 349 Ill.App.3d 404 (2004) (expected or intended—injuries must be reasonably anticipated)
State Farm Fire & Casualty Co. v. Martin, 186 Ill.2d 367 (1999) (exclusion for intentional acts; damages may be excluded even if not identical to intended)
Board of Trustees of the Univ. of Illinois, 116 F.3d 1154 (7th Cir.1997) (mere greater damage than expected does not defeat exclusion)
Nationwide Ins. v. Board of Trustees of the Univ. of Illinois, 116 F.3d 1154 (7th Cir.1997) (principle of insurer exclusion for intentional or expected damages)
First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill.2d 128 (1976) (standard for voluntary dismissal/appeals; not directly on point but cited for procedural context)