Explaining The Fortuity Doctrine & Intentional Acts Exclusions
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Exclusions to Coverage for Construction Defects
\\n\\nImplicit in the concept of insurance is that the loss occur as a result of a fortuitous event not one planned, intended, or anticipated. Oddly, the fortuity principle never appears in insurance contracts. The principle is rooted in common law and in the statutes of at least six states. The fortuity principle has the effect of an exclusion. That is, an all-risk policy might provide coverage for all risks minus named exclusions, but never provides coverage for non-fortuitous events, even though non-fortuitous events are not named exclusions in the policy. For this reason, the fortuity principle is sometimes called the unnamed exclusion.
\\nA fortuitous event is an event which so far as the parties to the contract are aware, is dependent on chance. It may be beyond the power of any human being to bring the event to pass; it may be within the control of third persons; it may even be a past event, such as the loss of a vessel, provided that the fact is unknown to the parties. Compagnie des Bauxites de Guinee v. Ins. Co. of N. Am., 724 F.2d 369,372 (3d Cir. 1983) (quoting Restatement of Contracts \\xa7 291 cmt. A (1932))
\\nThe purpose behind the fortuity doctrine applies with full force where a party attempts to purchase insurance against the consequences of his own ongoing wrongful conduct.\\u201d (Scottsdale Ins. Co. v. Travis, Court of Appeal of Texas, 68 S.W.3d 72 (2001))
\\nIntentional Acts Exclusions
\\nJudge Cardozo, in 1923, stated a simple and obvious rule of law that \\u201cno one shall be permitted to take advantage of his own wrong. {Messersmith v. American Fidelity Co., 232 N.Y. 161, 133 N.E. 432 (1921).] California, by statute, covers has codified Cardozo\\u2019s statement. Almost every insurance policy issued in the US excludes the intentional acts of the insured. Those that do not are covered by the public policy adopted by most states.
\\nTo insure against wrongful acts would be to allow people to act wrongfully with no adverse effect since their victims would be compensated by insurance.
\\nInsurance involves the transfer of the risk of possible losses from the policyholder to the insurer. It is not available for losses that the policyholder knows of, plans, intends, or is aware are substantially certain to occur. Insurers faced with a construction defect claim may attempt to exclude coverage by claiming that the insured intended to build a defective structure. This is not a wise option to exercise unless the insurer has clear and convincing evidence of such intent.
\\n\\xa9 2021 \\u2013 Barry Zalma
\\nBarry Zalma, Esq., CFE,
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