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We had an interesting ruling last week in the game. The party was facing a daemon, and the druid cast summon insect swarm. The swarm was summoned by magic, but the actual swarm itself, directed by the druid, was not "magical" per se, so I ruled that spell resistance did not apply. However, since the daemon could only be hurt by magical weapons, the swarm was not hurting the daemon, but it was annoying it and causing penalties to its AC. It was an interesting situation with, as you can see, more than one exception added in. Would any of my fellow referees have ruled the situation differently?
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I think I would have ruled it the way you did.
The swarm is summoned magically but is not itself magic "enough" to cause damage to an entity that requires magic to damage it.
The AC penalty is there regardless of MR, unless there is some other mitigation factor.
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I presume its a daemon with eyes, ears, mouth, nose, etc. A swarm of insects blinding a creature and it unable to hear to determine distance; if they buzzing in his ears, if lucky could disorient him to stumble off a cliff (hopefully) or do harm to himself if attempting to claw them off, nothing to extreme, but minor scaring, enough to distract him from other actions, like killing PCs.
I dare not presume it as I uncertain, but in some games daemon do not need to breath, but a handful of insect crawling down his mouth, at least must make him feel like gagging a little?
If it could cast spells, it would need to make a saving throw to concentrate...
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As much as I would want to argue with you, I have to agree that was the best ruling based on the rules and based on the fun factor!
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The editor concurs.
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This is better than I would have come up with I'm pretty sure. appreciate the share of this. Will be affecting how I make similar calls.