i believe it's intended
allied characters (green on the map) won't be hit by aoe spells, same as companions. neutral characters that aren't actively fighting you but aren't explicitly allied with you will not be protected in this way, and if you do hit them a couple of times they'll turn hostile (red) and you'll have to kill them too
best way around this is to just aim your skills so they don't hit neutral characters, provided you don't want to kill them
