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Court clarifies ‘known claim’ exclusion applies in insurance coverage dispute

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The Indiana Court of Appeals granted rehearing to a case involving a dispute over coverage for environmental contamination and found that the “known claim” exclusion applies, not the known loss doctrine.

Patricia Kopetsky and Indiana Insurance Co. sought clarification from the appeals court regarding the possible finding that George Kopetsky knew of contamination in a housing development prior to obtaining CGL coverage from Indiana Insurance.

In June, the judges ordered a trial on the issue of whether the known loss doctrine would bar coverage by Indiana Insurance. George Kopetsky sold land to KB Home Indiana for a housing development. It’s alleged that he knew as early as May 2002 that some of the lots were contaminated. He obtained coverage from Indiana Insurance in April 2002 that was in effect for a four-year period.

The judges addressed the legal effect of Indiana Insurance’s knowledge of the contamination. Patricia Kopetsky argued that under the common law known loss doctrine, even if a jury found George Kopetsky knew of the contamination before taking out the policy, coverage would only be barred during the first of the four coverage years. The insurer, citing the known claim exclusionary language from the policies, argued that there is no coverage for the final three years, regardless of what the jury finds regarding George Kopetsky’s knowledge. It also argued that a finding he knew of the loss before obtaining coverage would bar coverage in the first year as well.

“We agree with Indiana Insurance because we conclude that, consistent with the Indiana Supreme Court’s approach in Sheehan Construction Co., Inc. v. Continental Casualty Co., 935 N.E.2d 160 (2010), the Policies’ ‘known claim’ exclusionary language controls,” Judge Cale Bradford wrote in Indiana Insurance Company v. Patricia Kopetsky, and KB Home Indiana Inc., 49A02-1304-PL-340.

That case requires the court to start with the policy language and determine if the loss would be covered under the general coverage clause and if any exclusions apply that would preclude coverage, without regard to whether the loss constituted an “economic loss.”

George Kopetsky knew of the contamination no later than May 2002, so coverage is barred for the second through fourth years, regardless of the jury’s finding of any prior knowledge. Any finding of knowledge of contamination prior to the first year of coverage only applies to the first year, Bradford wrote.

The original decision is affirmed in all other respects.  
 

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  1. Your article is a good intro the recent amendments to Fed.R.Civ.P. For a much longer - though not necessarily better -- summary, counsel might want to read THE CHIEF UMPIRE IS CHANGING THE STRIKE ZONE, which I co-authored and which was just published in the January issue of THE VERDICT (the monthly publication of the Indiana Trial Lawyers Association).

  2. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  3. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  4. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

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