Courts are often interpreting Insurance Policies without looking at the language in which the Insurance Policies are printed. Cases are sometimes decided as a result based on a so-called "doctrine" that changes from jurisdiction to jurisdiction, and sometimes from Judge to Judge in the same jurisdiction. Some would call this "judicial activism," and it is. General maxims should not decide specific Insurance Coverage Questions.
A recent decision of the Court of Appeals of Wisconsin provides an example: Download State v. Hydrite Chemical Co. (Wis. Ct. App. 2005), cert. denied (Wis. 2005). In State v. Hydrite, the Wisconsin Court of Appeals held that the "known loss doctrine" bars Coverage under an Excess Liability Insurance Policy "only" when the Policyholder knows that there is "a substantial probability" that the Policyholder's liability for a third party's damages will be so great as to invade the Excess Insurance Company's Coverage. Download State v. Hydrite Chemical Co. (Wis. Ct. App. 2005), cert. denied (Wis. 2005), Official Slipsheet Opinion at 4.
This is not to say that the case was wrongly decided or, for that matter, that it was decided correctly. However strong the "known loss doctrine" may be in Wisconsin Insurance Law, the Court's holding was based on the supposed "doctrine" because the language is not found in the Insurance Policy before the Court.
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