With summer here, I had to do something tying insurance coverage to the dog days ahead. And what a case I found. Amazing. In 1937, the Alabama Supreme Court addressed coverage, under a liability policy, for a retail store that caused a customer to be sunburned. Really, you can look it up: Loveman, Joseph & Loeb v. New Amsterdam Casualty Co., 233 Ala. 518 (1937). It is just remarkable how lucky you are to get a newsletter (and free, free, free, I remind you) that provides such fascinating information.  It’s actually a very interesting decision – and probably had the policyholder bar up in arms.  

On July 20, 1934, a Mrs. Thuss visited Loveman, Joseph & Loeb to purchase a product to protect her skin from sunburn. A store employee recommended Ardena Sun Tan Oil. Mrs. Thuss bought a bottle. However, the store clerk mistakenly gave Mrs. Thuss a bottle of Ardena Bronze, a product used to simulate a sun tan and not protect the user from sunburn. Who knew they sold bronzer in 1934? You can see where this is going.

Mrs. Thuss traveled 40 miles away to a river, used Ardena Bronze and after 20 minutes in the sun was severely burned.

Mrs. Thuss made a claim against the store for damages. New Amsterdam Casualty Co. refused to defend the store under a public liability policy. Mrs. Thuss and the store settled the matter for $1,500 (about $30,000 today). 

Coverage litigation ensued. At issue before the Alabama Supreme Court was the applicability of the following exclusion asserted by the insurer: “This policy does not cover any accident; * * * (1) caused directly or indirectly by the possession, consumption, handling or use, elsewhere than upon the premises described in the schedule of statements, of any goods, article or produce, manufactured, handled or distributed by the assured unless covered hereunder by written permit endorsed on this policy.” (emphasis added).

The insurer maintained that, based on this exclusion, no coverage was owed to the store because the accident did not occur on the premises of the insured. Rather, Mrs. Thuss was sunburned when she used the bronzer 40 miles away from the store. The Alabama high court agreed with the insurer, rejecting the insured’s argument that the accident took place in the store – when the clerk mistakenly sold Mrs. Thuss bronzer instead of a sun protection product.    

The court held: “We can readily agree that a mistake was made by the clerk on the premises of the assured, as described in the schedule of statements, but we cannot subscribe to appellant’s further proposition that the accident, the happening of the event which produced the injuries, must be regarded, in law, as having occurred on the assured premises, when as a matter of fact the occurrence actually took place some forty miles away.”

Needless to say, the exclusion provided a significant limitation on coverage for the store’s products. For contaminated food, there is only coverage if the person ate the food while in the store. And the court was not unmindful of this limitation: “We approve, as of course, the rule that insurance contracts may be and often are made with very limited coverage, the small premium fixed on careful calculation of the hazard assumed; and they should be enforced, not a new or enlarged contract made for the parties.”