This blog has previously discussed property damage claims caused by water damage in a variety of contexts. When plumbing and bathroom fixtures or leaky plumbing causes damage to a home, subtle differences in the facts can impact whether the loss is covered. Generally, incidents that involve sudden exposure to water damage will be covered but slow long-term water seepage is less likely to be covered. However, an interesting case out of a federal court in Wisconsin turns this notion on its head at least to a certain extent.
The court in Strauss v. Chubb Idem. Ins. Co. ruled that water damage to the policyholders’ property was a covered “occurrence” despite the fact the damage was caused over a sixteen year period. The insured homeowners in this case discovered that water infiltration had penetrated the interior of the home. The damage caused by the water infiltration was continuous in nature and caused progressively more damage over time. The water damage began shortly after construction of the home and continued over a sixteen year period during rainy periods. The policyholders submitted a claim with Chubb two months after discovering the water damage. Chubb denied the claim, and the insurance carrier appealed the decision.
While the fact that the water damage occurred over a period of years rather than a brief interval makes this case unusual. The case is especially interesting because the policy expired five years prior to the homeowners discovering the water damage. Under Wisconsin law, the court applied a legal theory called the “contiguous trigger theory”. This legal principle dictates that an injury is ongoing from the time of exposure until the party discovers the property damage.
The insurance company argued that the court should apply the “manifestation theory”, which is applied in some jurisdictions. Under this legal theory, the claim does not arise until property damage becomes apparent. Because the claim was submitted five years after the policy expired, the damage would have occurred outside the period of coverage under this approach. Although the federal court acknowledged that the contiguous trigger theory had previously only been applied in third-party claims, the federal court extended the theory to this first-party claim.
While Chubb contended that this approach would give rise to liability on claims made against stale policies, the court rejected this claim partially based on the language of the policy. This language indicated that the policy would provide coverage for all risks of physical loss to the property if the damage was caused by an occurrence during the policy term. Under the policy, an “occurrence” was defined as a repeated and continuous exposure to substantially the same conditions.
Because the insurance company drafted the insurance policy, the ambiguity in the language was construed against the insurance company. This principle of contract construction justified application of the contiguous trigger theory according to the court. Jurisdictions vary on which approach they apply, so this can be a critical issue if a dispute arises about whether ongoing damage occurred during the policy period.
If you have questions about Miami-Dade homeowners insurance claims, you are welcome to contact my Miami insurance claims law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.