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Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp. (1995) 2d Cir., 73 F.3d 1178, 1215 (citations omitted) (emphasis supplied) modified on other grounds by 85 F.3d 49.  Because Housewares insured against liability to a third party and not property damage, we look to see if the insured knew of a liability, rather than whether property damage was known.  Montrose Chemical Corp. v. Admiral Ins. Co. (1995) Cal., 913 P.2d 878, 905.

Housewares claims that the known loss doctrine should not apply in the present case because, although it may have known of conditions which could lead to liability, its liability was “unknown” until it was fixed in amount.  Housewares argues that, because it was not aware (and in some cases is still not aware) of the full extent of its liability, the known loss doctrine is inapplicable to it policies.  We disagree.  

In support of its position that, before the known loss doctrine may be applied, the full extent of liability must be known, Housewares cites CPC Int’l, Inc. v. Hartford Acc. and Indem. Co. (1998) N.J.Super.A.D., 720 A.2d 408, 422, certification denied (1999) 726 A.2d 937, wherein the court stated, “As long as there remains uncertainty about damage or injury that may occur during the policy period and the imposition of liability upon the insured, and no legal obligation to pay third party claims has been established, . . . there is a potentially insurable risk for which coverage may be sought.”  Notwithstanding this view, we hold that there is a distinct difference between knowledge of the existence of liability and knowledge of the full extent of liability.

The existence of liability can be known without the full extent of liability being fixed.  For example, if one negligently injures a pedestrian with one’s automobile, one’s

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