Economic Loss Doctrine In Wisconsin

Economic Loss Doctrine in Wisconsin: Insurer or Insured Friendly?

Introduction

The economic loss doctrine has played a significant role in determining insurance coverage disputes for different types of insurance claims. Generally speaking, the economic loss doctrine is a judicially created concept that precludes recovery within tort law "for strictly economic losses arising from a contract." See John J. Laubmeier, Demystifiyng Wisconsin's Economic Loss Doctrine, 2005 Wis. L. Rev. 225 (2005). The origins of the economic loss doctrine stem from the idea that there should be a fundamental distinction between tort law and contract law. Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, 262 Wis. 2d 32, 662 N.W.2d 652 (2003). Moreover, the doctrine

Insurance companies are often forced to pay out the policies for economic losses. Brian G. Gilpin & John Scott Hoff, The Economic Loss Doctrine: The Death of Subrogation, Air & Space Law, Spring 1996, at 1, 1, 18. This concept has been called the "death of subrogation" because insurance companies would not be allowed to pursue a third party that caused an insurance loss to the insured. Insurance companies dislike this because it removes a buffer zone for liability of defected products from a third party. Those who are advocates of the economic loss doctrine within insurance law believe so because the unavailability of subrogation means that the purchaser needs to evaluate the risk that the product will fail and make decisions based on the assumption that it will, and the purchaser chooses to allocate the potential failure through insurance. John J. Laubmeier, Demystifying Wisconsin's Economic Loss Doctrine, 2005 Wis. L. Rev. 225, 259 (2005). This is the whole basic structure and purpose of the economic loss

Ellen S. Pryor, The Economic Loss Rule and Liability Insurance, 48 Ariz. L. Rev. 905 (2006). Different versions of the economic loss doctrine exist, but under all versions, insurers can make and have made no-coverage arguments relying on the economic loss rule. Id. at 915. Insurers would argue that the inclusion of language for "occurrence" and "bodily injury or property damage" within the CGL policy should knock out coverage for losses that fall within the economic loss rule. Id. at 913. Insurers are mistaken in this argument because that language does not have the effect of knocking out coverage for the claims that fall within the doctrine. Id. The economic loss doctrine is a remedies principle that determines how loss can be recovered. Vogel v. Russo, 2000 WI 85, 16, 236 Wis. 2d 504, 511, 613 N.W.2d 177, 182 (Wis. 2000). Policy language determine whether an insurance policy covers a claim.