... by Federal Court in Florida.
It is sometimes difficult to distinguish the so-called Known Loss "Doctrine" from Policy Limitations on Coverage Grants, such as limitations to Covered Loss or Damage "commencing ... During the policy period shown in the Declarations," as in the case of 3303-05 Marina Road, LLC v. West Bend Mutual Insurance Co., Download 3303-05 Marina Road, LLC v. West Bend Mut. Ins. Co. (Wis. Ct. App. Case No. 2009AP1629, Opinion Filed September 8, 2010) PUBLIC ACCESS also published as 2010 WL 3489391 ¶15 (Wis. Ct. App. September 8, 2010)(Westlaw subscription required to access Westlaw; page numbers not available at time of this publication). As the Wisconsin Court described the "doctrine" in this First-Party Case, in which it appears to have been exclusively applied (until recently): "'The known loss doctrine is a common law defense to insurance coverage according to which insurers are not obligated to cover losses that are already occurring when the coverage is written or [that] have already occurred." Id. ¶21.
A Federal Court in Florida may have recently extended the "Known Loss Doctrine" to Liability Insurance Coverage; the decision actually appears to have depended on language found in the Liability Insurance Policies at issue there. In that case, a Homeowner sued the Contractor who constructed her home, "alleging that her residence contained numerous construction defects." She recovered a Judgment against the Contractor totaling $1,297,998.36, and another Award for Costs in the amount of $167,147.71. The Federal Judge was faced with five CGL or Commercial General Liability Policies issued to the Contractor, including two "initial" Policies and three "renewal" Policies from two different Liability Insurance Companies. Arnett v. Mid-Continent Casualty Co., Download Arnett v. Mid-Continent Casualty Co. (M.D. Fla. Case No. 8.08CV2373, Order Filed July 16, 2010) PUBLIC ACCESS also published as 2010 WL 2821981 *2 (M.D. Fla. July 16, 2010)(Westlaw subscription required to access Westlaw; the Online Docket of this case on Pacer reflects that this Federal Declaratory Judgment Action has been temporarily Stayed by Order of Court until an appeal "of the underlying state court judgment" is exhausted.).
Among other Insurance Coverage Claims, the two Insurance companies asserted in that Federal Declaratory Judgment Action that the underlying Damages Claims of the Homeowner against their Insured, the Contractor, "constituted known injuries". "The insurers argue that [the Insured-Contractor] became aware of the damages during [the] initial policy, and therefore, [that] the damages constituted 'known losses' which are not covered under any subsequent policies." Immediately after stating this contention, the Federal Court pointed to specific language in the Liability Insurance Policies which expressly addressed knowledge of "bodily injury" or "property damages" prior to the policy period and provided that "any continuation, change or resumption of such 'bodily injury' or 'property damage' during or after the policy period will be deemed to have been known prior to the policy period.'" Arnett v. Mid-Continent Casualty Co., 2010 WL 2821981 at *3.
The Federal Court held in that case that there was Coverage under the Liability Insurance Policies for some, but not all, of the Damages claimed by the Homeowner based upon whether or not "the known loss clause bars coverage," or not. See id. at *4.
The Federal Court's decision may bear on the resolution of some Catastrophe Claims which may or arguably were known to the Policyholders and other Insureds before the Policy Coverage began -- perhaps even before the Liability Insurance Policy Coverage began.
Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims: Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process). Mr. Wall will be a featured speaker on several panels which will address the BP Oil Spill Catastrophe. On September 15, 2010, he will be a featured speaker on a panel addressing "BP Oil Spill Damages Claims: The Coverage Predicates" at the September 15, 2010 Seminar of the Insurance Law Committee sponsored by the Orange County Bar Association in Orlando, Florida. Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters: How to Properly Investigate and Handle Overwhelming Claims". The American Conference Institute is offering a discount to readers of this Blog: Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.
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