In the case of New York Life Insurance Company v. Head in 1913, the U.S Supreme Court ruled on a dispute involving an insurance policy claim. The plaintiff, Mrs. Head, was seeking to recover from her husband's life insurance policy after he committed suicide while allegedly insane. The defendant, New York Life Insurance Company argued that they were not liable as Mr.Head had intentionally caused his own death and thus violated a clause in his contract which stated that no payment would be made if the insured died by their own hand. The court held that if it could be proven beyond reasonable doubt that Mr.Head was indeed insane at the time of his death and therefore incapable of understanding what he was doing or its consequences then this would constitute an exception to the general rule regarding suicides and self-destruction clauses in life insurance policies. This ruling set a precedent for future cases where insanity may have played a role in someone taking their own life; essentially stating that insurers cannot deny claims based solely on suicide without considering potential mental health factors involved.

In the dissenting opinion for New York Life Insurance Company v. Head, Justice Holmes disagreed with the majority's decision to allow a life insurance policyholder to recover damages from an insurer who had wrongfully denied his claim. He argued that this ruling contradicted established legal principles and would have far-reaching implications for the insurance industry. According to Holmes, if an insurer denies a claim in good faith based on its interpretation of contract terms or factual circumstances surrounding a case, it should not be held liable for damages beyond what is stipulated in the policy itself. The justice believed that allowing such recovery could potentially expose insurers to excessive financial risk and create instability within the industry as a whole. Furthermore, he contended that it was inappropriate for courts to interfere with private contractual relationships by imposing additional obligations not explicitly agreed upon by both parties.