Gindele Provides Perspective on Arizona Supreme Court Ruling for Law360

Laura Gindele spoke with Law360 Insurance Authority about an Arizona Supreme Court ruling adopting a subjective standard for determining whether a property loss is fortuitous. The coverage dispute arose from building damage associated with a seafood tenant’s repeated spilling of salt water on the concrete floors of its property. Answering a question certified by the Ninth Circuit, the Arizona court focused on the insured’s knowledge when coverage attached. The Ninth Circuit subsequently vacated the district court’s rulings and remanded without deciding whether coverage was owed.

Laura noted that the decision creates a subjective standard that is difficult to apply uniformly. “I agree with the court’s basic point that reasonable foreseeability alone is probably too broad a basis for treating a loss as just uninsurable, but that doesn’t necessarily justify making the insured’s actual subjective knowledge the decisive standard,” she said. Laura cautioned that the standard gives policyholders greater control over the factual narrative and emphasized the importance of carriers gathering evidence concerning prior professional opinions, similar damage, and earlier claims to establish what the insured knew.

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