On July 14, 2025 the Indiana Court of Appeals decided Allianz Global Risks US Insurance Company v. Technicolor USA, Inc., — N.E.3d — (Ind. Ct. App. 2025); Cause No. 24A-PL-1522. This is a lengthy decision with numerous holdings, several of which are significant wins for policyholders in other cases. The court upheld Indiana’s long-standing policyholder-friendly law on the so-called “known loss” doctrine. The court also weighed in on language Allianz calls the “deemer” clause but which is better referred to as the known injury exclusion. Finally, the court refused to alter the trial court’s award of prejudgment interest, a decision in line with Indiana’s pragmatic use of this tool.

A.      Background

This dispute involves coverage for a mass tort action in Taiwan. In 2016, hundreds of former workers at a factory there brought suit against the company that once owned the factory and companies related to it. The former workers allege that they suffer from numerous diseases due to their exposure to industrial contamination while working at the factory and living in on-site dormitories.

This 2016 suit is the second such suit by former workers at this same factory. The first suit was brought in 2004, making similar allegations against the same companies. After a judgment in that action in 2014, more former workers sought to join that action, but were denied, so they brought the 2016 suit.

The first suit resulted in coverage litigation in which PSRB was successful in getting rulings on numerous issues favorable to its clients, including in Thomson Inc. v. Ins. Co., 11 N.E.3d 982 (Ind. Ct. App. 2014).

B.      Known Loss

Allianz was not a part of that first coverage action that led to Thomson because it did not sell policies until later. But Allianz tried to argue in Technicolor that the known loss doctrine barred coverage. The known loss doctrine says essentially that you can’t buy insurance for a loss that has already taken place. So, if your house burns down, you can’t go out and buy fire insurance to cover the fire that already destroyed your house. Unlike most insurance law, the known loss doctrine isn’t based on policy language. It was created by courts to make sure that insurance is doing what it is supposed to do, which is protect people from losses they didn’t plan or know about.

Allianz argued that, since Technicolor knew about the first Taiwan lawsuit, providing coverage for the second Taiwan lawsuit would essentially mean providing coverage for a house after it burned down.

The Court of Appeals disagreed. The Allianz policies at issue are liability policies. They promise to indemnify the policyholder if the policyholder is held liable for harm to someone else. They also promise to defend any attempt to impose liability. The Technicolor court noted that prior Indiana cases hold that the “loss” for a liability policy is the liability, not the underlying harm that led to liability. Slip Op. at 13-14, citing Thomson, 11 N.E.3d at 999 and Gen’l Housewares Corp. v. Nat’l Sur. Corp., 741 N.E.2d 408, 416 (Ind. Ct. App. 2000) (These were also both PSRB cases). Since at the time it bought the Allianz policies at issue Technicolor did not know it would be liable in Taiwan for this second Taiwan action, the known loss doctrine didn’t apply. This was in spite of the policyholder’s knowledge of the Taiwan contamination, and its knowledge that it had been sued in Taiwan and held liable for harm to other claimants. Since there is no overlap in claimants in the two class actions, those are not the “loss” at issue in the second Taiwan action. They therefore weren’t enough to bar coverage under the known loss doctrine.

This holding reaffirms the narrowness of the judicially-created known loss doctrine. A contrary decision would have prevented policyholders from recovering for losses they did not know had occurred when they bought their policies.

C.      Known Claim Exclusion or Deemer Clause

This policy language states:

B. This policy applies to “bodily injury” and “property damage” only if:

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(3) Prior to the “policy period”, no “insured” . . . and no “employee” authorized by you to give or receive notice of an “occurrence” or claim, knew that the “bodily injury” or “property damage” had occurred, in whole or in part. If such a listed “insured” or authorized “employee” knew, prior to the “policy period[,]” that the “bodily injury” or “property damage” occurred; then any continuation, change or resumption of such “bodily injury” or “property damage” during or after the “policy period” will be deemed to have been known prior to the “policy period[.]”

E. “Bodily injury” or “property damage” will be deemed to have been known to have occurred at the earliest time when any “insured” . . . or any “employee” authorized by you to give or receive notice of an “occurrence” or claim:

(1) Reports all, or any part, of the “bodily injury” or “property damage” to us or any other insurer;

(2) Receives a written or verbal demand or claim for damages because of the “bodily injury” or “property damage”; or

(3) Becomes aware by any other means that “bodily injury” or “property damage” has occurred or has begun to occur.

(Slip Op. at 16-17). Allianz argued that since Technicolor knew when it bought the Allianz policies that other people besides those in the first Taiwan action had alleged injuries, this language barred coverage.

Again, the Court of Appeals disagreed. Allianz couldn’t show that the policyholder knew of any specific claimant’s alleged injuries prior to the policies’ inception. It only alleged that the policyholder knew there were likely other potential claimants out there. Federal courts applying Indiana law have held that, to bar coverage under the known injury clause, the policyholder has to know of the specific injury at issue prior to the policy’s inception. Westfield Ins. Co. v. Sheehan Const. Co, Inc., 580 F.Supp.2d 701, 716 (S.D. Ind. 2008).  

Since Allianz couldn’t point to anyone whom Technicolor knew to have been injured prior to inception of the Allianz policy, it couldn’t bar coverage under the known injury clause. The court also held that it was Allianz’s burden to prove this, rejecting Allianz’s argument that it should be the policyholder’s burden.

This decision confirms the narrow reading of this policy language, rejecting Allianz’s attempt to unreasonably broaden it. If Allianz had prevailed, this language might have harmed policyholders who were vaguely aware of risks but not aware of specific losses.

C.      Prejudgment Interest

Finally, the Court of Appeals made an important decision on prejudgment interest. This part of the case involved the duty to defend. Allianz had denied it had a duty to defend, and so Technicolor had defended itself in the second Taiwan action. The trial court held that Allianz had to reimburse Technicolor for those defense payments it had made. Pursuant to Indiana Code §34-51-4-7, the trial court also held Allianz had to pay interest on those defense payments. This interest began to accrue on each invoice 60 days after the date of the invoice, which is the date Technicolor was obligated to pay it.

Allianz argued that, at trial, Technicolor had failed to prove that it had actually paid all of its invoices on time. Without such proof, awarding prejudgment interest on the due date was improper. Technicolor should only get interest from the date an invoice was paid, not the date it was due.

The Court of Appeals again rejected Allianz’s argument. It noted numerous courts have held that interest begins to accrue when payment is due. See, e.g., Bd. of Works of the City of Lake Station, et al. v. I.A.E., Inc., 956 N.E.2d 86, 95-96 (Ind. Ct. App. 2011); Hizer v. Gen. Motors Corp., Allison Gas Turbine Div., 888 F. Supp. 1453, 1464 (S.D. Ind. 1995).

This decision is appropriate and helpful for numerous reasons. First, Indiana law is clear that prejudgment interest “is a recovery for the lost use of property due to the defendant’s wrongful conduct, and is not simply an award of interest accrued on a judgment.” Harlan Sprague Dawley, Inc. v. S.E. Lab Group, 644 N.E.2d 615, 619 (Ind. Ct. App. 1994). To limit awards of prejudgment interest to the date when something was actually paid would undercut this purpose.

In addition, a policyholder is harmed if it can’t pay its bills on time. It suffers potentially strained relationships with its defense lawyers, and potential hits to its creditworthiness. Insurers who put their policyholders in such situations should have to compensate their policyholders for these harms, and prejudgment interest is a good way to do so.

The Court of Appeals’ decision here is a victory for PSRB’s clients in this case, and for policyholders more generally.

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