Insurance — homeowner policies — exclusions — notice

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United States Court of Appeals For the Seventh Circuit

Civil

Insurance — homeowner policies — exclusions — notice

Where an insurer did not provide a copy of an insurance policy to the insureds until after damage was discovered, the insurer cannot rely on exclusions in the policy.

“Safeco argues that Wisconsin’s prohibition against creating coverage through estoppel implicitly overrides this principle. See Shannon v. Shannon, 442 N.W.2d 25, 33-34 (Wis. 1989) (insurer cannot waive coverage clauses via litigation conduct). But Wisconsin’s rule that an insurer cannot preclude coverage based on exclusions unknown to the insured doesn’t rest on estoppel. Safeco’s failure to provide the Millers with the exclusions goes to the legal question of whether the exclusions were part of the agreement in the first place. Safeco failed to tell the Millers about the exclusions—whether by delivering the policy or by any other means—until after the Millers discovered the damage. And just as an insurer couldn’t amend a policy’s terms to exclude a loss after the insured discovers that loss, an insurer cannot refuse coverage by pointing to an exclusion that the insured didn’t know about until after the insured discovered the loss. Gross v. Lloyds of London Ins. Co., 358 N.W.2d 266, 271 (Wis. 1984) (insurer’s failure to provide insured with ‘exclusionary language until after the accident’ meant insurer couldn’t rely on it); Roeske v. Diefenbach, 249 N.W.2d 555, 559-60 (Wis. 1977) (insurance contract limited to terms ‘expressed and agreed upon by’ the parties; if insurer wants ‘to incorporate the provisions of their usual policies . . . such provisions must be specifically brought to’ insured’s attention). Safeco cannot deny coverage based on exclusions it failed to tell the Millers about until after they discovered the damage.

Affirmed.

11-1232 Miller v. Safeco Ins. Co. of America

Appeal from the United States District Court for the Eastern District of Wisconsin, Callahan, Mag. J., Tinder, J.