October 15, 2019

Funny Insurance Decision — The Tale of the Malicious Raccoons

Posted by Mark Miller

Reminiscent of those television adds where the insurance company brags about having seen everything, and paid it, the case of Capital Flip, LLC v. American Modern Select Insurance Company (W.D. Pa. 1999) is a funny insurance decision that illustrates a different story.  There, malicious raccoons damaged a dwelling, and the insurance company refused to pay the claim.  If you wonder how this crazy decision relates to large corporate insurance claims, please read on.

In Capital Flip, the policyholder bought a named peril property policy.  One of the numerous perils covered was “Vandalism or malicious mischief.”  The policyholder argued that the raccoons were engaged in malicious mischief.  The court, looking to common usage of the words vandalism and malicious mischief, found that these acts typically related to a person.  Since raccoons are not persons, the court held that there was no coverage. 

Given that our law firm handles only large corporate insurance claims, I was hesitant to even read a decision about a home owner claim gone bad. But, I was curious.  I wanted to see if raccoons really are malicious.  After reading the decision, I contemplated what lessons, if any, large corporate policyholders could learn from this comical situation. 

On reflection, there is only one lesson we can learn from Capital Flip – when insuring property, buy an “all risk” policy.  All risk policies are the norm.  They cover “all risks of physical loss or damage,” and case law interpreting these kinds of policies is settled and policyholder friendly.  Coverage is exceedingly broad.  Why then did Capital Flip buy a named peril policy covering such limited perils?  We don’t know, but perhaps it was to save money. 

This funny insurance decision illustrates a point we make over and over again.  If there is a claim, Insurance policy wording is all that matters.  What the insurance broker says the policy covers means nothing.  What the insurance company says the policy covers means even less.  All that matters is insurance policy language. 

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