Source: http://wdc-online.org/wdc-journal/archived-editions/unwritten-exclusion-fortuity-principle
Timestamp: 2019-04-20 13:02:40+00:00

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Most people with a working knowledge of general liability policies know that they contain a long list of excluded acts for which bodily injury or property damage coverage does not apply. This list of exclusions runs the gamut from intentional acts to acts of war and is routinely reviewed by insurers to determine if there is coverage provided in a policy for the particular circumstances presented. But did you know every policy of insurance written in the state of Wisconsin contains an exclusion that cannot be found in that list of exclusions or anywhere else in the policy?
This article explains the origin and progression of the fortuity principle in Wisconsin from its birth in the law through its present application.
In other words, the fortuity principle is intended to address those situations where a loss is not accidental. It is against public policy to allow an insured to collect insurance proceeds for a known or expected loss.
The Hagen court noted that no Wisconsin case had dealt with the issue at hand and looked to the Iowa Supreme Court’s analysis in Altena, eventually holding that “a person purchasing homeowner’s insurance would not expect that he or she was insuring his or her children against liability for their sexual assaults.”15 It further found that it would not want to remove the deterrent that the threat of a money judgment provides and that it is good public policy to deter sexual assaults.16 Finally, the court found that “…Gulrud’s mother would cringe at the very suggestion they were buying and selling sexual assault insurance[,]”17 which has become one of the litmus tests for determining where the lines relating to the public policy principle are to be drawn. The Hagen court read the fortuity principle into the contract and found that it applied, despite the jury’s conclusion that Gulrud had unintentionally caused Hagen’s injuries. As a result, there was no coverage based on the public policy considerations embodied by the fortuity principle. Thus, there was no coverage even though it may not have been excluded under the policy’s intentional act exclusion.
The fortuity principle continues to evolve and remains a powerful exclusionary tool for the courts when deemed appropriate to further specific public policy objectives. An understanding that the exclusion exists in every Wisconsin insurance contract, despite not appearing in the language of the policy, allows for a proper evaluation of its application when a claim is presented.
1 Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 326 N.W.2d 727 (1982).
2 Id. at 464-465, 326 N.W.2d at 729.
3 Id. at 483-484, 326 N.W.2d at 738.
4 Id. at 484, 326 N.W.2d at 738 (citing Keeton, Insurance Law, sec. 5.3(a), p.279 (1971)).
5 K.A.G. by Carson v. Stanford, 148 Wis. 2d 158, 434 N.W.2d 790 (Ct. App. 1988).
6 Id. at 160-161, 434 N.W.2d at 791.
7 Id. at 161, 434 N.W.2d at 791-792.
8 Rodriguez v. Williams, 42 Wash. App. 633, 713 P.2d 135 (1986).
9 Altena v. United Fire and Cas. Co., 422 N.W.2d 485 (Iowa 1988).
10 K.A.G. by Carson at 166, 434 N.W.2d at 793.
11 Hagen v. Gulrud, 151 Wis. 2d 1, 442 N.W.2d 570 (Ct. App. 1989).
12 Id. at 3, 442 N.W.2d at 571.
14 Id. at 5-6, 442 N.W.2d at 572 (citing Keeton, Insurance Law, sec. 6.3(a) p. 352).
15 Id. at 7, 442 N.W.2d at 573.
18 Ramharter v. Secura Ins., 159 Wis. 2d 352, 463 N.W.2d 877 (Ct. App. 1990).
19 Id. at 357, 463 N.W.2d at 879.
20 Haessly v. Germantown Mut. Ins. Co., 213 Wis. 2d 108, 569 N.W.2d 804 (Ct. App. 1997).
21 Id. 110-111, 569 N.W.2d at 805-806.
23 Id. at 117-118, 569 N.W.2d at 808.
24 Id. at 119-120, 569 N.W.2d at 809.
25 Prosser v. Leuck, 196 Wis. 2d 780, 539 N.W.2d 466 (Ct. App. 1995).
26 Id. at 782-783, 539 N.W.2d at 467.
29 Id. at 784, 539 N.W.2d at 467.
31 Id. at 786, 539 N.W.2d at 468.
32 Id. at 787, 539 N.W.2d at 469.
33 Id. at 788, 539 N.W.2d at 469.
34 Becker by Kasieta v. State Farm Mut. Ins. Co., 220 Wis. 2d 321, 582 N.W.2d 499 (Ct. App. 1998).
35 Id. at 323-324, 582 N.W.2d at 499-500.
38 Id. at 326, 582 N.W.2d at 501.
39 Id. at 327, 582 N.W.2d at 501.

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