In my last post, I mentioned that the fortuity doctrine creates many legal issues. Before going into those legal issues, it is important to understand exactly what the fortuity doctrine is.
Experts and courts agree that the very nature of insurance implicitly creates the requirement that a loss is accidental or by chance in order to be a covered loss under an insurance policy. Courts have explained that it is against public policy to allow an insured to collect insurance proceeds for a known or expected loss. Consequently, the fortuity doctrine could create a basis for insurance companies to deny coverage in first-party insurance claims. To be clear though, it is the loss that must be fortuitous and not the event leading to the loss. As stated by Michal A. Hamilton in Introduction to Property Insurance (Insurance Law: Understanding the ABCs, 673 PLI/Lit 155):
To qualify as fortuitous, the loss or damage – rather than the acts causing the loss or damage – must be unexpected at the time the policy is issued. In addition, the loss must be caused by a chance event beyond the insured’s control. Consequently, the fortuity doctrine should prelude coverage for a claim where the evidence establishes that: (1) at the time the policy was issued, the insured reasonably foresaw the loss or damage it sustained; and (2) the insured failed to take action, knowing that such inaction might predictably result in loss or damage.
Put another way, a loss is fortuitous if it:
[R]esulted from a ‘risk,’ as contrasted with being an ordinary and almost certain consequence of the inherent qualities and intended use of the property.
30 A.L.R. 5th 170 §3.
Now that I have explained the fortuity doctrine, next week I will explain how courts apply the fortuity doctrine to specific sets of circumstances.
