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Housewares claims that applying the known loss doctrine would render the “expected or intended” language superfluous.  In support of its position, Housewares cites Owens-Corning Fiberglas Corp. v. American Centennial Ins. Co. (1995) Ohio Ct.C.P., 660 N.E.2d 770, 778 and Monsanto Co. v. Aetna Cas. and Sur. Co. (1993) Del.Super.Ct., No. 88C-JA-188, slip op. at 55-56.  In these cases, the courts refused to apply the known loss doctrine because of language in the policies which limited coverage to occurrences which were not expected or intended.  These courts concluded that the element of fortuity was sufficiently addressed in the “expected or intended” language.  We disagree.

The “expected or intended occurrence” exclusions and the known loss doctrine serve different functions.  The expected or intended exclusions focus upon the time of the act for which insurance is sought, while the known loss doctrine looks to the time the insurance contract is entered into. 9  The Second Circuit summarized the distinction:

“The ‘expected or intended’ claim requires consideration of whether, at the time of the acts causing the injury, the insured expected or intended the injury, an inquiry that generally asks merely whether the injury was accidental.  The ‘known loss’ defense requires consideration of whether, at the time the insured bought the policy (or the policy incepted), the loss was known.  The contenions may overlap, but they are distinct . . . .”

9  An example will illustrate the differences between the “expected or intended occurrence” exclusion and the known loss doctrine.  If an individual in an automobile intentionally runs down a pedestrian, the occurrence would be “expected or intended,” and therefore excluded from coverage under an existing insurance policy.  The known loss doctrine would prevent such an individual from purchasing insurance to cover this incident after the fact.  If an individual accidentally runs down a pedestrian, coverage would not be excluded on the basis of any “expected or intended” language under an existing policy.  However, the known loss doctrine would still prevent this negligent party from purchasing insurance to cover an accident that has already occurred.

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