Insurers Oppose Broadening R.I. Inspection Liability

November 18, 2004

The Property Casualty Insurers Association of America (PCI) filed a motion for permission to file an amicus brief with the Rhode Island District Court to challenge the potential expansion of the state’s statute dealing with an insurer’s inspection immunity.

“This action arises out of The Station nightclub fire that ended in tragedy. PCI sympathizes with the victims and the families of those who lost their lives in that terrible blaze. However, these difficult, unsettling and emotionally charged circumstances should not make bad law,” said Robert Hurns, manager, legislative database and counsel for the PCI.

Rhode Island law immunizes insurance companies from claims relating to inspections conducted in connection with the issuance of insurance policies. Essex Insurance Company, the defendant, issued a policy of general liability insurance to owners of The Station nightclub. The plaintiffs’ complaint alleges that Essex negligently conducted an inspection in connection with the issuance of the commercial insurance policy to the owners of the nightclub.

The association’s motion was filed to support the defendant, Essex Insurance Company. “PCI’s views and perspective will assist the court in gauging the impact an adverse ruling will have on the insurance industry as a whole if the plaintiff’s allegations are not rejected. Essex did not create the condition that was the proximate cause of the personal injuries, death and loss described in the plaintiffs’ complaint,” said Hurns.

It would be a great leap for the court to rule that a cause of action exists in Rhode Island for the alleged tort of negligent insurance inspection, according to PCI. First, Rhode Island as a matter of law and policy has determined that so-called negligent insurance inspections will not lead to the imposition of liability on insurance carriers. Second, the Supreme Court of Rhode Island has not ventured to extend such liability to insurance carriers. Third, any expansion of such liability should be determined by the Rhode Island legislature.

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