In our last post, we were talking about a case involving a commercial general liability insurance carrier, Florida homeowners and a real estate developer. The underlying complaint involves the use of Chinese drywall and the damage to the home resulting from its use. As that complaint was making its way through the courts, the couple filed a motion to add unfair claim settlement practices to the suit. The court denied the motion, saying it was premature.
What remained to be decided before the plaintiffs could renew their bad faith claim was whether the developer was liable for the damage and whether the developer’s insurance policy would cover that damage. The insurance policy question was addressed in the insurance company’s motion for summary judgment. The defendant argued that the policy was not in effect at the time the damage occurred.
The developer’s commercial general liability and umbrella policies were in place in 2009, when the homeowners notified the developer of the damages and when they filed their complaint. The policies were not in effect, though, in 2006, when the homeowners first noticed the damage.
Without policies in effect, the insurer had no responsibility to either their insured (the developer) or the homeowners (the third-party claimants) to pay for repairs, the court said. The court shot down the homeowners’ argument that the damage was continuous, and that the first manifestation of damage was the trigger for coverage. The policies were “occurrence” policies, and the coverage was not in place when the homeowners first noticed the damage.
Insurance coverage kicks in according to the language of the policy. The court explained that a “trigger” is exposure, manifestation, continuous trigger or injury in fact. Also, when a court interprets an insurance policy, the court looks for ambiguity in the language used. In Florida, a policy can only be interpreted against the insurance company if the term is genuinely inconsistent and if the insured proves to the court that the claim is covered.
With this decision, the insurance carrier is not required to provide coverage or a defense for the developer. What that means to both the developer and the homeowners is that the developer could be on the hook for the repair bills, which considerably diminishes the homeowners’ chance of recovering any of the costs.
This insurance company is off the hook. If the developer had insurance from another carrier at the time of the damage, the homeowners may be able to pursue their claim under that policy.
Business Insurance “Judge Rules for Insurer in Chinese Drywall Coverage Dispute” 12/02/10
Amerisure v. Popkin, 2010 WL 4942972 (S.D.Fla.) via WestlawShare