Declarations and Exclusions

The Amazing Fraudini!

Gloria Teasdale: I thought you left.
Chicolini: Oh no.  I don't leave.
Gloria Teasdale: But I saw you with my own eyes.
Chicolini: Well, who you gonna believe, me or your own eyes?

-- from Duck Soup (The Marx Brothers, 1933)

In an article in Insurance Journal, investigator Brad Ballentine discloses the hitherto unsuspected similarities between insurance fraud and stage magic:

One trick that magicians often rely upon is the tendency we all have to assume things.  They very often use props of objects we are all familiar with, so that when we see the prop, we assume it is the genuine article.  For instance, the magician pulls out an egg, and we subconsciously assume it is an actual egg, and not a hollow plastic shell, or he presents you with a deck of cards and we subconsciously assume that it is a genuine deck of cards and not a trick deck.  Most people seeing a scarf or handkerchief might unwittingly assume it to be nothing more than that, instead of realizing that two scarves of the same color, stitched together on three sides, still looks like a single scarf, but makes a nice pouch in which to hide things (like a hollow, plastic egg).

Similarly, in the world of insurance claims, we are constantly being presented with something that looks like the genuine article, and thus, our tendency is to assume that it is.  A report about injuries and treatment written on a doctor's letterhead causes us to assume that there was an actual patient, that there was an injury, that there actually was some treatment and there actually was a doctor who was in some way involved with that report . . . .

Via the always interesting Law and Magic Blog, which is about exactly that.

Arrivederci Aroma

Lloyd's of London, not Starbuck's, is almost certainly history's most important coffee house, and the Lloyd's markets are justifiably famous for their ability to place insurance coverage for unusual risks, as exemplified by this list of 9 Odd Things Insured by Lloyd's of London.  (Look!  Elephants!)

Like a bespoke suit, a "bespoke policy" of Lloyd's insurance is a sign that a certain height of celebrity has been achieved by its holder.  The latest example is Lloyd's providing insurance for a winemaker's nose and sense of smell for €5 million ($7.8 million).  The insured is Ilja Gort, the Dutch owner of Chateau de la Garde in Bordeaux, and his is hardly the first olfactory instrument so insured.  Per the Lloyd's press release:

[N]ose insurance is not just restricted to wine buffs.  It is a common purchase for a range of occupations, and Watkins Syndicates is currently working on a policy with a US perfume consultant who develops new fragrances for perfume houses.

[Underwriter Jonathan] Thomas explains: 'You have a limited number of people who need to insure their nose to [Gort’s] extent.  But few people realise just how important their nose is to their job.  Look at the wine, perfume and food trades – a loss of sense of smell has a huge effect on their roles.

'The most famous nose to insure was that belonging to [sherry maker] Jose Ignacios Domecq.  Not only did he have a very distinct sense of smell for sherry, he also had a very distinct nose.  Mr Gort is following in a fine tradition.'

In fact Domecq was known as El Nariz, ‘the Nose’.  He earned this name for literal as well as figurative reasons – his hawk-like nose was memorably large.

[Mr. Thomas needs to brush up on his American entertainers, however: he refers to proboscally-unchallenged Lloyd's-insured singer-comedian Jimmy Durante as "Snozzle Durantee."  No respect for the classics, these underwriters.]

As noted by Patrick Collinson of The Guardian, "The more eccentric policies - on celebrity posteriors, fingers and noses - are . . . virtually all publicity stunts." 

Celebrity-related coverages can, however, serve a genuine function to protect those who are dependent for their livelihood on the continuing well-being of a prominent person.  In cases of that sort, Lloyd's celebrity policies qualify as one of the more specialized forms of "key man" insurance.  "Tiger Woods’ caddy, . . . has a policy to protect against his master’s early death," and Las Vegas magicians Siegfried & Roy, who carried Lloyd's policies on one another, actually collected when Roy was badly mauled onstage by one of the team's white tigers. 

One has to be sure, with policies like these, that the beneficiary has an actual insurable interest and will suffer a genuine loss should anything untoward happen to the insured party.  Otherwise, there are certain negative externalities created, as Collinson observes:

[T]he Victorians had a nice line in gambling on unconnected people's deaths until it was outlawed in the early 1900s.  It produced rather too many incentives to bump people off.

~~~

Illustration: The prominent sniffer above is neither Domecq's nor Durante's, but is the official mascot of the annual (and highly recommended) International Pinot Noir Celebration, in McMinnville, Oregon.

Arsonists No Longer On the Lamb

This just in via Insurance Journal:

Men Charged with Setting Fire to Home of 'Mary' from 'Little Lamb' Poem

Two men are accused of burning down the Sterling, Mass. birthplace of the woman made famous by the nursery rhyme 'Mary Had a Little Lamb.'

    * * *.

They are scheduled to be arraigned Tuesday in connection with the Aug. 12 fire that destroyed a vacant house in Sterling where town officials say Mary Elizabeth Sawyer was born in 1806.

Several ladybugs, on hearing the news, were seen to be flying away home.  Mary's spokesperson, Thomas A. Edison, could not be reached for comment.

~~~

[Lamb illustration from The History of Little Goody Two-Shoes (1766).]

Don't Say You Weren't Warned

Now here's a model of forward-thinking risk management from which many an industrialist might profit:

 

Via Dr. Boli’s Celebrated Magazine, for the discovery of which please join me in thanking Megan McArdle.

~~~

FOR ADDITIONAL CONTINUING LEGAL EDUCATION CREDIT: 

DR. BOLI’S NEW ACADEMY OF RHETORIC

Make the false appear true and the true appear false. . . . .   
Group discounts for district attorneys’ offices.

Dr. Boli: The Advocate's Friend!

When the Night Wind Howls in the Chimney Cowls

The Halloween-themed tableau infernal above, by Irfan Khan, is included in an extraordinary portfolio of photos from last week's wildfires posted by Matt Welch* on the Los Angeles Times' Opinion LA Blog.  The entire selection is worth a look, as it captures the sublime unreality of life in Southern California, where fires such as these are a possibility through much of any given year.

Often enough, surprisingly, California wildfires will scorch vast acreages without loss to life or structures.  This past week's fires were not that kind.  A Reuters report, posted today at Business Insurance, puts the current losses at 12 lives,  with 78 persons injured and the destruction of some 2,300 structures:

Roughly 14,000 insurance claims have been filed from last week's fire and wind storms in California, according to a research group for the property casualty insurance industry.

The New York-based Insurance Information Institute said insurers may have to pay up to $1.6 billion in claims for fires that ravaged the state's homes, farms, vehicles and businesses.

Every year when one or more major fires burn in and around hillside residential developments, the question arises: why encourage construction in obviously imperiled areas?  The East Coast variant -- when we aren't benefiting from a two-year string of subnormal Atlantic hurricane seasons -- is to ask why we build and rebuild beach front homes when we know they are just waiting to be swept away to sea. 

As the latest fires neared control yesterday, the LA Times' well-respected architecture critic, Christopher Hawthorne, slipped from the arts pages to Page One to opine that "Ignoring Nature, We Build Our Way Into Fire's Path" [the online version of the article receives a somewhat more tabloid-y title: "New developments mask wild land's deadly threat"].  Hawthorne typically leans Green on the subject of development, and this essay is consistent with that approach:   

Since the middle of the 20th century, this is how we have developed much of our new housing in the U.S., and particularly in Southern California: by pushing deep into canyons and deserts and onto flood plains.  We build reassuringly familiar-looking subdivisions, decorated with vaguely Spanish or Mediterranean accents, in locations that by land-use standards -- and by common-sense standards -- are truly exotic.

We build with the unstinting belief that growth is good and that progress in the form of various kinds of technology -- new building materials, military-style firefighting, a vast system of pumps and levees -- will continue to make it possible to construct new pockets of nostalgic architecture virtually anywhere. But maybe our nostalgia should extend beyond red-tile roofs to include earlier lessons about how and where it is safe to build. . . . 

One of the success stories of the last week has been Stevenson Ranch near Santa Clarita, which narrowly averted destruction in part because its houses were built with concrete roof tiles and heat-resistant windows.  But to celebrate this neighborhood as a model for escaping fire is itself a kind of escapism.  The question is never, why am I building here on this hillside that predictably catches fire every few years in the fall (and maybe now in spring or summer too)?  It is, instead, how can technology and new materials -- how can progress -- protect me from the dangers inherent in living where I have chosen to live?

Although Hawthorne is not stating them in that way, these are really no more than classic risk management questions.  We are presented with a known peril -- wildfire -- and must ask ourselves how best to address it.  One answer is to assume that the loss will occur, but to cushion the blow by purchasing insurance.  Another approach is risk prevention: utilize technology in order to limit the damage the peril will cause when it comes calling.  Hawthorne's preferred approach, plainly, would be risk avoidance: there's a serious risk over there, so let's just not go there in the first place.

The answer to the question "why are you building here" is usually a simple one, whether we build in the hills or put down floor at the shore: "I'm building here because I want to live here, because the air seems cleaner, because the view is delightful, and because I am (if I have my wits about me) prepared accept the risks and to take the actions or bear the costs necessary to build and live in this risky place." 

That answer does not address concerns for the preservation of wilderness qua wilderness -- which is undoubtedly a significant additional factor in Hawthorne's critical view of hillside development -- but it is a reasonable and prudent response from the standpoint of facing and managing risk.  If you don't ask for a subsidized or free ride -- insurance, for example, that is artificially underpriced in the name of "affordability" -- feel free to build your house on sand or in the canyons. 

Just remember, and be prepared to accept in some fashion, that the rule in southern California is well settled: "If you build it, the fires will surely come."

~~~

* UPDATE [1132 PDT]:  It seems that Matt Welch is becoming a fixture of fire-related discussions here at Decs&Excs.  In addition to his Opinion LA post linked above, I cited his 2003 Reason article on the California FAIR Plan last week here.  One more citation is essential:

On today's Los Angeles Times opinion page, in an item smolderingly yclept "Burn, burn, burn, burn, burn the rich," Matt takes note of a creative and effective response to the wildfire peril -- the AIG insurance plan, to which I alluded in this post, that provides its admittedly well-heeled insureds with benefits that include a private fire response team -- and is bemused by the howling outrage it inspires in some quarters:

You would think that the cheap availability of potent fire retardant, and the creation of supplementary firefighting capability — with costs borne entirely by the homeowners who choose to live in fire zones, instead of everyday taxpayers — would be a cause for at least mild enthusiasm.  Instead, it was greeted with howls of class warfare.

Numerous colorful examples -- and at least one suggestion that class-based arson would be a laudable social policy -- make the whole thing worth reading, if you can keep your eyes on it while shaking your head in disbelief.  Hot stuff indeed.

~~~

Post title, in the spirit of Halloween, from "The Ghosts' High-Noon" in Gilbert & Sullivan's Ruddigore.

Smokey Despair, or, "My Momma Told Me, 'You'd Better Chaparral'" [now with Updates]

In the past 48 hours, it seems that all of Southern California has begun to go up in flames.  Especially in an extra-dry year such as this one has been, this is no surprise, but it is far from a welcome development -- especially for those in or near the fire areas.  While Los Angeles County has seemingly drawn the most national attention -- the "celebrity-filled Malibu" angle probably accounts for that -- matters are as bad or much worse in San Bernardino and San Diego counties.  Today's issue of the Los Angeles Daily Journal (our local legal newspaper, unfortunately not available online to non-subscribers) reports that so many judges, lawyers and staffers in San Diego have been affected by fire that the county's entire court system was shut down yesterday.  (San Diego courts remain closed today, per the courts' website.)

• The Los Angeles Times has linked an Interactive Google Map of the fires throughout the region, with updates on size, containment (of which there is still very little) and damage.

• The NASA photo above gives an idea of the extent of fires around Los Angeles at mid-afternoon on Sunday.  At the NASA website, you can compare that photo side by side with another from three hours earlier, for an inkling of how speedily the conflagrations spread once they got started.

One of the key problems with California wild fires is the intermix of natural fuels -- uncleared brush and foliage, particularly in the chaparral-type ecosystems that dominate the region -- and man-made commercial and residential structures.  Back in May, early on in this year's fire season, Insurance Journal published a story ("High Expectations Create Hazard for Firefighters in the Wild") examining the heightened risks faced by firefighters pressured to "do whatever it takes" to save homes from the flames.  Among others, the IJ story quotes John Maclean "a federally certified firefighter and the author of several books on wildfire disasters":

Maclean said the Forest Service could scale back structural protection without too much political fallout, but that would not be easy for the California Department of Forestry and Fire Protection, which answers to the governor.

More than 6 million homes in the Golden State stand in wildfire 'red zones' and that number is expected to grow by 20 percent in the next decade.

'There is an expectation on the part of a lot of people that somebody better get in there and do or die for their house,' Maclean said. 'If you stop doing that and you stop taking reasonable risk to protect structures, you'd have a new governor in about five minutes.'

Chaparral, like many another natural phenomenon, has its own group of supporters, notably the California Chaparral Institute.  It is commonly assumed that the array of plants that make up chaparral actually thrive on fire, or require fire as part of its natural life cycle.  The Institute argues against that perception, emphasizing that while many plants are well adapted to recovery after a fire, none really require it.  Discussing "How chaparral is misunderstood," the Institute looks back at the long history of brush fire in California, and gives simple advice on managing the risk attendant on living when surrounded by a fire-prone native environment:

Large chaparral fires have occurred prior to 2003 and will continue to occur.  Southern California has one of the worst fire-prone climates on earth.  For example, an estimated total of 800,000 acres burned late September, 1889 in two different fires.  One in Orange County, the other in San Diego County (the 2003 Cedar fire [in San Diego County] burned a little over 273,000 acres).  They weren't big deals then because no one really lived in the back country.  Now, with so many homes up against the wilderness, fires can become catastrophic.

'Santa Ana. Sept. 25. - The fire which has been burning for the past two days still continues in the canyons. The burned and burning district now extends over one hundred miles from north to south, and is 10 to 18 miles in width. Over $100,000 worth of pasturage and timber has been destroyed.'

Los Angeles Times, September 27, 1889.

The best ways to prevent loss of life and property are to retrofit existing structures to make them more fire safe, plan communities so they are not built in high fire risk areas, and maintain proper vegetation management directly around structures.

Those whose homes and businesses are damaged in these fires will inevitably present claims to their insurers.  The most fire-prone brush and slope areas are predominately covered by the California FAIR Plan*, but private insurers can expect their share.  California Insurance Commissioner Steve Poizner yesterday issued a press release on responses to the fires.  While there will likely be a string of stories suggesting that insurers have dealt unfairly with fire claims, the Commissioner's release ends with this remark directed to "public adjusters," whose role is to represent insureds and to pursue claims on their behalf:

Commissioner Poizner also reminds public adjusters of a law enacted after the 2003 wildfires that prohibits them from soliciting homeowners for adjusting business for seven calendar days after the disaster.  The purpose of the law is to permit victims, such as victims of this week's fires, to have some time to comprehend their losses before contracts relating to their losses are solicited.

More fire and insurance news as the situation develops...

~~~

* Matt Welch, then with Reason magazine and now of the Los Angeles Times, took a skeptical view of the FAIR plan in 2003, noting its tendency to encourage building in dangerous areas by making available unduly affordable insurance. 

A personal anecdote: When we bought our current home in Glendale, just north of Los Angeles, 16 years ago, a brushfire came within a quarter mile or less two days after we closed escrow.  We were insured with the FAIR plan for the first ten years or so, at which point several private market insurers began writing in the neighborhood.  Were those insurers unwise?  Personally, I hope never to have cause to find out.

~~~

UPDATE [2115 PDT]: From his current perch at the LAT, Matt Welch has a few more choice insights on FAIR plans.  A small taste:

The Malibu Schadenfreude identified by Steve Lopez and others today contains a legitimate public-policy issue within its (even more legitimate?) naked class envy/hatred. Namely, that many rich folk who build mansions in canyons -- and their less-rich compadres who build McMansions in foothills -- do so with subsidized, artificially inexpensive, actuarily unsound, government-secured insurance of last resort, called the California Fair Access to Insurance Requirements, or FAIR for short (and ironic). . . .

It is peculiar that a government-based insurance mechanism originally intended to deal with the urban wreckage of the riotous -- but metaphorical -- "long hot summers" of the 1960's is now the central tentpole for property owners' responses to the literal "long hot summers" that annually turn southern California into the prime exhibit in the Tinder Box Museum.

Discuss, if you will.

~~~

FURTHER UPDATE [102607, 1047 PDT]:  The Wall Street Journal, in an article free to non-subscribers, profiles California Chaparral Institute founder Richard Halsey, who is encountered with hose at the ready as that chaparral around his own home burns vigorously:

• "Fires Turn Up Heat On a Key Advocate Of California Shrubs"

Mothers Against Brie & Chardonnay*

Suppose, just suppose, that you are the Aspen Art Museum.

On occasion, you make your gallery spaces available for a price for social events. 

At some of these social events, alcohol is served. 

Following one such event, at which he consumed some of the alcohol that was served, a guest hires a cab to take him to another location.  En route, the guest attacks the cab driver, tosses him out of the vehicle and steals the cab.  The guest is arrested a few minutes later and charged with, among other things, assault and driving while intoxicated. 

The injured cab driver brings suit  for damages for his injuries.  The defendants in the case are the obstreperous guest and -- you know what's coming, don't you? -- the Aspen Art Museum.

As the Aspen Times reports, the Museum did not provide or serve whatever alcohol the guest consumed.  "The museum leased its space to the . . . group [holding the event], which was not affiliated with the facility and only renting it as a party venue."

That’s why Brad Ross-Shannon, a Denver-based attorney who is defending the museum on behalf of its insurance company, Travelers, will seek a court order to have it dismissed from the lawsuit.

'The claims against the museum absolutely have no merit,' Ross-Shannon said. 'It’s our hope and intent to be dismissed from the suit.'

But according to [cab driver] Nesvat’s attorney, Jeff Wertz, the museum is liable because it violated what is known as the 'Dram Shop Act,' by knowingly and willfully serving [alleged assailant] Talton alcohol when he was visibly intoxicated.

[Aspen Times story via Donn Zaretsky's Art Law Blog.]

I cannot comment on how this will pan out in Colorado, but California galleries and museums can rest easy.  "Dram Shop" liability -- liability for the damage caused by the direct wrongdoing of someone to whom you provided alcohol -- is recognized in a number of states, but is significantly restricted in California law. 

The controlling statute is California Business & Professions Code section 25602 [PDF link], which provides for criminal misdemeanor liability for those who sell, furnish or give away alcoholic beverages to "any habitual or common drunkard or to any obviously intoxicated person."  However, under that same statute, the Legislature has specified that there is no civil liability for damages "to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of such alcoholic beverage" running from the provider of alcohol, whether as a commercial seller (e.g., a liquor store, restaurant or bar) or in a purely social setting (e.g., hosting a party or Sunday afternoon football get-together in your home).

For several years in the mid-1970's California did impose broad liability on alcohol providers for injury caused by the recipients of the inebriating beverages.  That liability was recognized by the state Supreme Court in 1971 as to commercial sellers of alcohol, then expanded to non-commercial social hosts in 1978.  That last extension was a step too far for Californians: the Legislature (or those in a position to make their opinions known through the Legislature) promptly amended section 25602 to include the current prohibition on civil liability for the intoxication of others.  The amended version of the statute includes this somewhat unusual subsection --

(c)    The Legislature hereby declares that this section shall be interpreted so that the holdings in cases such as Vesely v. Sager (5 Cal.3d 153), Bernhard v. Harrah's Club (16 Cal.3d 313) and Coulter v. Superior Court ___ Cal.3d ___ [the "social host" case] be abrogated in favor of prior judicial interpretation finding the consumption of alcoholic beverages rather than the serving of alcoholic beverages as the proximate cause of injuries inflicted upon another by an intoxicated person.

-- which is the legislative equivalent of telling the Supreme Court and other creative jurists: "We mean it, man!"

~~~

For Reference: The website for Mothers Against Drunk Driving -- which consistently endorses imposition of the broadest possible liability on alcohol providers -- provides a state by state summary of Dram Shop laws.

~~~

The cover illustration on the Penguin edition of Zola's L'Assommoir, above, is "The Hangover" by Henri de Toulouse-Lautrec, various versions of which, by the original artist and others, can be examined here. 

~~~

* UPDATE [101907]:

Anyone care to wager how long it will take before I receive a cease and desist letter from MADD requiring me to change the title of this post?    [Via Radley Balko -- who previously noted the mysterious dearth of actual mothers in MADD's upper echelons.]

Law & Order: Celebrity Suspect Unit

Last December, during my guest stint at Overlawyered, I pointed to -- and mocked somewhat -- an internal email from the offices of Los Angeles City Attorney Rocky Delgadillo emphasizing the need for prosecutors to get maximum public relations mileage out of "Celebrity Justice" cases.  Now, the Los Angeles Times has taken the bait. 

In a memorandum reproduced today by Kevin Roderick's LA Observed, LATimes "Innovation Editor" Russ Stanton announces that the paper is seeking candidates for this potentially fun-filled reporting position on its online Continuous News Desk:

Celebrity justice - This is part of a major initiative to build out a Crime & Justice space on latimes.com this year.  It involves writing breaking news off the entertainment beat, scouring court files to develop interesting and offbeat stories related to the entertainment industry and its denizens, and working with Metro in updating ongoing trials and following up on cases.

"Scouring court files" and covering the"offbeat" "denizens" of the fever swamp that is Hollywood.  Sounds like either a lot of fun or the fast track to needing a major  prescription for antidepressants.  Presumably, whoever fills this tempting vacancy will emphasize stories that go well with your morning glass of O.J. . . .

Wait!  I've got it!  How's this for innovation?: Sweeten the compensation package with a right of first refusal for the film rights to every Celebrity Justice story and offer the position to Brian Grazer.

Regulators Find Fine Fined Wines Must Warn

"Fining" has been a part of the winemaking process for centuries.  When grapes ferment, the process does not result in the clear sparkling fluid one wants to admire in the glass.  Leftover proteins and other yeast and grapeskin byproducts, while not harmful or necessarily offensive in themselves, leave the wine cloudy and visually unappealing.  The answer to the problem is fining: introducing an agent in to the wine that will snag the unwanted components and sink to the bottom, after which the newly brightened wine can be drawn off.  Or, as defined on the site of the Robert Mondavi winery, fining is:

The traditional method of clarifying wine. Insoluble substances bind with wine components and precipitate to reduce tannin or remove unstable proteins.

Historically, egg whites have been the most common fining agent.  Other options include the mineral compound bentonite, gelatin, the fish byproduct isinglass, and the milk protein casein.  The point of fining is that the fining agent itself, along with the various unwanted compounds to which it binds, will be left behind and not present in the final beverage.

Nevertheless, Insurance Journal reports that proposed federal regulations will require winemakers who fine their wine to attach allergen warning labels:

Vintners have been using byproducts from milk, eggs, wheat and even fish guts in the winemaking processes for centuries.

But a new federal proposal could require American wineries to disclose such unsavory items -- used as 'fining' agents to remove grit -- as ingredients.  The proposal, which could be passed by the end of the year, would require companies to redesign the labels on every bottle to protect people who are allergic to certain foods.

    * * *

The FDA adopted the Food Allergen Labeling and Consumer Protection Act in 2004.  It requires labels on every food or drink that contains one of eight major food allergens: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat and soybeans.

The act came after Harvard University scientist Christine Rogers petitioned the government to add an allergen warning to alcoholic drinks.  Rogers, who is allergic to eggs, said she would notice reactions whenever she tipped a glass of wine.

Oddly, given that wine is for the most part consumed and enjoyed by adults, the article cites the statistic that allergies affect 2 to 5 percent of children, and concludes with a quote from Ms. Catharine Alvarez of Fremont, California, who "supports the proposal [apparently because her] 4-year-old son is allergic to eggs, and her 7-year-old daughter is allergic to peanuts."

U.S. wine labels are already required to include the warnings of health risks associated with alcohol, and the medically questionable warning that the wine may contain sulfites.  (For more on the array of  information that is required to appear on every bottle, see this anatomy of a wine label.)

U.S. beverage regulators are not the first to consider allergy-related warnings on wine labels.  The New Zealand website of the international wine and spirits firm Pernod Ricard, for example, includes a statement on "Issues with fining agents for allergy sufferers and vegans" that demonstrates that allergen labeling, if it needs to be done at all, can be presented in a factual and non-hysterical fashion:

Allergen statements can be found on the back labels of all of our wines warning possible allergy suffers of the substances that have been used in the fining process of wine in accordance with the Australia New Zealand Food Standards Code.

Red Wine - 'This wine was clarified the traditional way, using egg whites. Traces may remain.'

White Wine and Méthodes/Sparkling - 'This wine was clarified the traditional way, using dairy and fish products. Traces may remain.'

That page also includes an informative description of what fining is, why it is done, and the relatively low likelihood that any allergy-causing residue remains in the wine you are drinking.

[Fining photo (look at all those eggs!) via Merryvale Vineyards.]

~~~

For Further Reading:

Insurance Journal is unusually focused on wine today.  In addition to the labeling story, it also reports on fine wine as a tempting target for burglary.  More on my personal weblog, here.

Sing a Song of Data Loss

In this iPodding age, with hard drives aspiring to the condition of Universal Jukebox, here is an interesting practical query on the insurability of digital music downloads:

Let's just say (hypothetically speaking) that I bought all my songs from iTunes at 99¢ a pop.  Let's just say.  So what if both my laptop and my iPod are destroyed in a horrible, cataclysmic ... hurricane?  Given that digital music is supposed to be actual property (that can actually be stolen, etc) does renter's insurance cover the $10,000 in lost songs?

Although it is posed in terms of renter's insurance, the question is an equally good one under a homeowners policy.  The answer will likely depend, first, on whether the insurance policy applies at all to the particular piece of equipment on which all that music was being stored and, second, on whether the policy applies at all to loss of data.  For purposes of this discussion, we'll assume that some more or less universally covered cause of loss -- say, an accidental fire -- is the culprit, so that we do not have to wrestle with all the "wind vs. water vs. whatever" issues that are causing such headaches in Louisiana and Mississippi courtrooms.

While every policy is different, computers or musical devices as tangible artifacts will likely be included under the "contents" coverage of a typical homeowners or renter's policy.  Coverage for contents is, in fact, the most common reason to purchase renter's insurance, since the building owner's policy is virtually guaranteed not to provide any protection for tenants' personal property.  If the particular policy either specifically states that it does cover electronic equipment, or if the policy covers losses to personal property generally and does not specifically exclude coverage for some or all electronic equipment, we are over the first hurdle.

Unfortunately, while electronic equipment itself is likely covered, the bits and bytes stores in and on that equipment very likely is not.  Most policies are likely to be written in terms of covering "direct physical loss" and data, even though stored physically, is often not considered to be "physical" in itself.  Additionally, many policies will contain specific exclusions barring coverage for the value of lost data or for the cost of recovering or recreating it.  This quote from a 2005 Pittsburgh Business Journal article on overlooked homeowners coverages sums things up:

Computers and data:  Do not assume that your home computer is automatically included in your policy -- especially if you use your home computer for work or in a home-based business.  Also, your policy may not cover the cost of lost, damaged or stolen computer programs, or the expense of recovering data lost or trapped on damaged hard drives and other media.  In particular, homeowners with home-based businesses should investigate riders or other supplemental coverage to adequately protect equipment, software and data.

That distinction -- between the physical hardware and the intangible information it contains -- is a fairly common one in insurance.   When data itself is injured or lost, with or without some physical damage to the equipment on which it resides, it generally is not going to be covered unless the applicable policy refers to it explicitly.  For more, this 2001 IRMI article on the question "Is Computer Data 'Tangible Property' or Subject to 'Physical Loss or Damage'?" gives an idea of how many different directions the courts have gone in debating the issue.

The upshot for worried iPod users: (1) Read your policy carefully, to get an idea of how likely you are to lose your investment; and (2) consider physical remedies such as off-site backups of music or data that you would not want to lose or (3) use a download provider (such as eMusic) that is relatively free in allowing re-downloading of previously purchased music.

An Afterthought:  Even if you have coverage on your policy that applies to the loss of downloaded music, you should only expect coverage for legally downloaded tracks and the insurer will be right to expect you to provide proof of what was lost and how it was obtained in the first place.  It has long been the rule that one who has acquired property illegally -- for instance, a thief -- acquires no title to and possesses no "insurable interest" in that property, rendering it effectively uninsurable. 

An Additional Afterthought: Remember, please, that insurance serves the purpose of compensating the insured for a loss actually suffered.  That is, it works to put the insured back in essentially the place the insured occupied before the loss occurred.  So, if there is no cost entailed in replacing that lost music, there is nothing for the insurer to pay: other than the time it will take to re-download, you have not lost anything and a payout for the original price of the downloads is simply a windfall.  Insurance would enter into it -- assuming that the applicable policy actually covers data loss of this sort -- only if there is some expense entailed in putting the insured right back where they started from. 

[Link to the original question via Idolator, where the ensuing comments reflect less than well on music lovers' opinions of their insurers. Photo by lyn belisle, via stock.xchng.]