Jewelry Insurance and The Missing Wedding Band—Avoiding the Mysterious Disappearance Exclusion
My parents, Bill and Alice Merlin, celebrated their 65th wedding anniversary yesterday. I am very fortunate to have both of my parents alive at my age. The photo depicts my mother receiving a special kiss from my father and me at a party following the Newport to Bermuda race in 2018.
Thinking about their wedding anniversary, wedding rings and bands came to mind. I have discussed jewelry insurance as far back as 2009 in Insurance Agents and Policyholders Need to Schedule Jewelry for Better Coverage. I picked for today’s blog a jewelry “mysterious disappearance” case out of the Miami area1 since that is where my parents first met each other.
It is important to note that the case in point involves an “all-risk” insurance policy rather than a theft insurance policy. The court analyzed the “mysterious disappearance” exclusion as follows:
Considering the first defense— mysterious disappearance— raised by Jeweler’s as a defense to the suit brought against it by Julien and Harriet Balogh, and by Western Assurance as a defense to the suit brought against it by David Balogh, we must begin with the proposition that this is not a theft policy. Plaintiffs in the respective suits are not required to show a theft before they are entitled to recover. The policy here involved is much broader and is of the type known as an ‘all-risk’ policy. It is axiomatic that plaintiff must show that the loss falls within the risks insured against, but it is also axiomatic, that it is for the defendant to show that the loss was not due to one of the risks insured against but rather to an excepted cause. It would seem that all plaintiff need show in such a case is a loss, since losses from all causes are covered. Defendant, arguing that a mysterious disappearance is ‘any disappearance the circumstances of which excite— and at the same time baffle— wonder or curiosity.’ attempts to distinguish between the classic cases of lost or misplaced property, and a case which is baffling and therefore a mysterious disappearance. Assuming that it has proved its point, at least in the first instance, defendant argues that plaintiff was therefore under the obligation to go forward and prove a theft, and, having failed to do so, cannot recover. As can be seen, defendant relies to a large extent on semantics. Under his theory, any loss, the exact cause of which could not be proved by at least a preponderance of the evidence, would automatically be classed as a mysterious disappearance, and recovery would be defeated unless the plaintiff could prove a theft, embezzlement, or some other specific cause. What then becomes of the ‘all-risk’ feature of the policy? As the Court said in Chase Rand Corporation v. Central Ins. Co. of Baltimore, in construing such a feature of a jeweler’s block policy: ‘Plaintiff’s sole obligation was to furnish defendant with such explanation, as it, in good faith, received and accepted concerning the time and cause of the loss, and this it has done. If plaintiff were required to go further * * * the inclusive character of the coverage of the insurance policy would be a delusion, and a snare’ (emphasis supplied) citing and relying upon Agricultural Insurance Co. v. A. Rothblum, Inc., which had held that ‘in an action by the insured against insurer, the onus would not be upon the insured to allege and prove, as a condition precedent, that the loss was not occasioned by the specified exceptions. Rather it would be incumbent upon the insurer to allege and prove, as a condition subsequent, that the loss arose from one of the excepted causes.’
If the clauses in each of the policies, that of Jeweler’s Mutual and that of Western Assurance, be examined, it will be found that they read:
‘This Policy Insures Against All Risks Of Loss Of Or Damage To The Above Described Property Arising From Any Cause Whatsoever Except:
‘(M) Unexplained loss, mysterious disappearance or loss or shortage disclosed on taking inventory.’
It would appear that the phrase ‘disclosed on taking inventory’ not being set off by commas, was intended to modify disappearance and loss as well as shortage. In fact the whole exception seems to concern itself with losses, disappearances or shortages disclosed upon the taking of inventory. At least it is equally susceptible of such an interpretation and the ambiguity is to be resolved against the party drawing the instrument. Furthermore such an interpretation would be more in keeping with the ‘all-risk’ feature of the policy than would defendant’s suggested interpretation. It must be observed that the cases upon which defendant relies do not involve ‘all-risk’ policies, but rather theft policies, in which a mysterious disappearance is made prima facie evidence of theft. This type of policy is so different from that with which we are here concerned that the cases construing such theft policies are of little or no weight in the present situation.
Even assuming for the sake of argument that any mysterious disappearance is an excepted cause, still the burden is upon the defendant to prove that the loss was due to the excepted cause, so that, the fact that it may not be possible to find in this case that the plaintiff has proved a theft by a preponderance, is immaterial as he has no such burden. What is important is that it is not possible to find that the defendant has established its defense that the cause of the loss was a mysterious disappearance, and so this defense must fail.
The case was decided in 1958—the year of my parent’s marriage. It should be noted that “all-risk” policies were a new contract form at that time. The court’s analysis obviously highlighted the difference in contract analysis between a named peril policy and the then newer “all risk” form.
Thought For The Day
There is nothing nobler or more admirable than when two people who see eye to eye keep house as man and wife, confounding their enemies and delighting their friends.
—Homer
1 Balogh v. Jewelers Mut. Ins. Co., 167 F.Supp. 763 (S.D. Fla. 1958).
