Fortuity Principle Washington
In Washington, we call the fortuity principle the known risk principle, and first enunciated it in Public Utility District No. 1 v. International Insurance Co., 124 Wn.2d 789, 805, 881 P.2d 1020 (1994):
"The known risk defense is premised on the principle that an insured cannot collect on an insurance claim for a loss that the insured subjectively knew would occur at the time the insurance was purchased." Accord Hillhaven Properties Ltd. v. Sellen Constr. Co., 133 Wn.2d 751, 767, 948 P.2d 796 (1997) (extending known risk principle to first-party insurance).
Moreover, "The knowledge that some loss may occur in the future is the driving force behind the purchase of insurance." Public Util. Dist. No. 1, 124 Wn.2d at 808.
"The known risk, known loss, and loss in progress defenses are generally considered to be part of the 'fortuity' requirement that runs throughout insurance law." 7 COUCH ON INSURANCE 102:9, at 102-24.
Oddly, the fortuity principle never appears in insurance contracts.
The principle is rooted in common law and in the statutes of at least six states. M. Elizabeth Medaglia, et al., the Status of Certain Nonfortuity Defenses in Casualty Insurance Coverage, 30 Tort & Ins. L.J. 943, 986 (1995) (listing state statutes).
The fortuity principle has the effect of an exclusion.
That is, an all-risk policy might provide coverage for all risks minus named exclusions, but never provides coverage for nonfortuitous events, even though nonfortuitous events are not named exclusions in the policy. for this reason, the fortuity principle is sometimes called the unnamed exclusion. Stephen A. Cozen & Richard C. Bennett, Fortuity: the Unnamed Exclusion, 20 Forum 222, 222 (1985).
We note that fortuity is expressly provided for in most third party insurance policies. Such policies require an "accident" or "occurrence" to trigger coverage. Often, those policies also expressly exclude coverage for intentional conduct, i.e., conduct expected or intended from the insured's standpoint. Moreover, "intentional, willful, criminal, and similar conduct may be held 'uninsurable' as a matter of public policy, regardless of whether such conduct is excluded by the contract language." 7 COUCH 103:23, at 103-50.
We find some discomfort in being asked to give effect to an "unnamed" exclusion in an insurance contract, an exclusion that purportedly exists not as a matter of contract but as a matter of common law. Insurers know how to write exclusions to coverage. We wonder why they have left the fortuity exclusion to courts to find and interpret. It is conceivable, particularly for a property insurer, that an insurer might choose to write a policy indemnifying the insured for losses that may be in whole or in part nonfortuitous. No party has, however, contended fortuity is not part of the coverage equation here, so we leave any misgivings we may have to another day.