Ferguson v. Phoenix Assurance

• Mr. Ferguson = owner of a drug store = insured owner = "Ferguson" = plaintiff
• Phoenix Assurance Company of New York = "Phoenix" = defendant = insurance company

• Thieves broke & entered (B&E) into the Ferguson drug store. The thieves damaged the store to the tune of about $70. They also stole $32 of medication narcotics & $433 from the safe.

When Ferguson filed an insurance claim, Ferguson denied coverage for the safe for $433.

Ferguson sued Phoenix.

Ferguson won in the trial court in Kansas.

Does a rule of evidence in an insurance policy, beyond that necessary to prevent fraud, violate public policy, rendering the rule un-enforceable?

Phoenix argued that the thieves left no evidence of force or violence on the outer door of the safe to steal the $433. As a result, Phoenix argued that Ferguson could not be reimbursed for the $433 based on Phoenix's Rules of Evidence for an insurance claim.

Yes. A rule of evidence, imposed in an insurance policy, going beyond that reasonably necessary to prevent fraud violates public policy & is not enforceable.

"Mere evidentiary condition beyond reasonable standard to prevent fraudulent claim is against public policy if it prohibits insurance payment where there’s other evidence of break-in." Contracts Ayres/9th ed. Outline

• Contracts_Ayres/9th_ed._Outline#E._Conditions