Insurance Law Lesson 45: Fortuity Requirement

Fortuity means “a chance occurrence; the state of being controlled by chance rather than design.” (Google).


Insurance covers only fortuitous losses. Losses that occurred before the policy was procured are not fortuitous. “A completed loss is not covered under an after-acquired insurance policy.” Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 452 Mich. 440, 459 (1996).

This is also known as the “known loss” doctrine.

This concept goes back at least to the 1800’s. In the case of Ins. Co. v. Lyman, 82 U.S. 664 (1872), the United States Supreme Court held in favor of the insurer, explaining that:

“The plaintiffs, when they renewed the policy of the 15th January, and paid the premium for insurance, knew that the vessel was lost, and that the defendants had no such knowledge or information.

“As on this state of facts it would be obvious that no action could be sustained on the policy — and indeed that, in point of fact, the taking of such a policy, and causing the defendant to sign it would have been a fraud.”

As the saying goes, you cannot insure a building that is already on fire.

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