Court Opinion

ID: 9850182
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:53:07.557561+00
Date Added: 2024-06-11T09:20:32.833122
License: Public Domain

VERGERONT, J.
¶ 41. (concurring). I write separately to raise a question not answered by American *679Girl-, is there a need in Wisconsin for the known loss doctrine that is not adequately addressed by the combination of insurance contract terms, questions on the application for insurance, and the defenses available to insurers under Wis. Stat. § 631.11. See footnote 20.
¶ 42. Insurers may exclude from coverage losses about which insureds knew when they applied for insurance. See, e.g., National Union Fire Ins. Co. v. Stroh Cos., Inc., 265 F.3d 97, 104 (2d Cir. 2001) (contaminated products insurance policy excluded losses that, as of the inception of the policy, "the insured knew or could have reasonably been expected to know .. . had occurred or might likely occur"). Insurers may also ask insureds to identify on applications all losses (defined by the insurers) that insureds know have occurred or will likely occur, and insurers may then exclude these losses from coverage. If an insured makes a representation the insured knows or should have known was false, and the other requirements of Wis. Stat. § 631.11 are met, that is a basis for rescinding the policy or limiting the insurer's obligation under the policy. Although many jurisdictions have adopted the known loss doctrine, in none of the cases I read did I find an explanation of the need for the doctrine in view of these and comparable alternatives.
¶ 43. On the other hand, I did find cases — though, to be sure, in a minority of jurisdictions — that either declined to adopt the known loss doctrine or expressed reservations about it for reasons that are worth considering. See City of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1153 (2d Cir. 1989) (refusing to adopt the known risk defense in the absence of New York law on point, and expressing concern that the defense "might well swallow up the 'more narrow' doctrines regarding (1) concealment and misrepresen*680tation, and (2) damages that are 'expected' or 'intended' by the insured"); Generali-U.S. Branch v. Bank of Montreal, No. 92-36689, 1995 WL 21595, at *1 (9th Cir. 1995) (predicting Oregon would be persuaded by Johnstown and not apply known risk/known loss doctrine); Aluminum Co. of America v. Aetna Cas. & Sur. Co., 998 P.2d 856, 879 n.15, 882 (Wash. 2000) (expressing discomfort in applying an exclusion that is not stated in the contract, but nonetheless following the governing law of Pennsylvania); Owens-Corning Fiberglas Corp. v. American Centennial Ins. Co., 660 N.E.2d 770, 778 (Ohio Com.Pl. 1995) (declining to adopt doctrine in part because it would swallow up the narrow doctrines regarding fraud and misrepresentation and the policy term that an occurrence must be neither expected nor intended by the insured).
¶ 44. If the known loss doctrine is needed to effectuate public policies that are not already adequately addressed, then an articulation of that need will provide a foundation for defining the scope of the doctrine. This is a topic that has a significant impact on insureds and insurers alike and, in my view, is deserving of further consideration by the supreme court.
¶ 45. I am authorized to state that Judge Lunds-ten joins this concurrence.