Kemper Independence Insurance Co. v. Islami (Insurance Coverage)

* This case is recommended for publication.


In Kemper Independence Insurance Co. v. Islami (2019AP488), the Court of Appeals District II agreed with an insurer that coverage was not due to an innocent insured when another insured on the policy committed fraud.

The Islamis were legally separated, though they still lived together. Ydbi Islami intentionally set fire to their home, which Ismet Islami legally owned. Ismet Islami sought coverage from her insurer Kemper for damages from the fire.

The court agreed with Kemper that there was no coverage because Ydbi had lied to Kemper about his actions. The Kemper policy barred coverage if an insured conceals or misrepresents a fact on which the insurer relies or which contributes to the loss.

The court rejected Ismet’s arguments that

  • Coverage was not barred because Wisconsin statutes (Wis. Stat. § 631.95) prohibit denial of coverage to a domestic abuse victim based on acts of the abuser. Instead, the court found no evidence that the fire was the result of domestic abuse as defined in statute.
  • Ydbi was not an insured under the Kemper policy because the Islamis were legally separated. Although they were legally separated, the court found Ydbi was still Ismet’s “spouse” covered under the insurance contract.
  • Ismet was an “innocent insured,” so could not be denied coverage based on Ydbi’s fraud. Instead, the court found the specific language of the fraud provision in the Kemper policy barred coverage for all insureds if one insured committed concealment or fraud. The policy lacked a severability clause to provide coverage to an innocent insured, so Ydbi’s fraud did bar coverage for Ismet.