SteveK February 13th, 2013
This declaratory judgment action was brought against Travelers Property and Casualty Company of America (“Travelers”) seeking a declaration that Travelers provided coverage to a subcontractor that allegedly performed negligent work as part of an extensive home improvement project involving construction of an addition, including the excavation of a full basement, construction of footings, foundation, framing, exterior finish, roofing, windows, plumbing and electrical work. When the contractor sued the homeowners for failure to make payment, the homeowners counter-sued, claiming that they had suffered damages due to defective workmanship. The contractor in turn sued several of its subcontractors, including Builders of America, Inc. (“BOA”), seeking indemnification and contribution.
Travelers issued a commercial general liability insurance policy to BOA which covered the period during which the construction took place, but which was cancelled effective April 1, 2002, for non-payment. In response to Travelers’ motion for summary judgment, the plaintiff homeowner submitted a certification in which he stated that, “after the house was completed[,] severe cracking, shifting, and other major deficiencies began to develop.” The trial judge concluded that there was no evidence the alleged property damage occurred during the Travelers policy period and, therefore, that the policy did not provide coverage to BOA for plaintiffs’ claims.
On appeal, the court noted that there was no question that the policy at issue was an “occurrence” policy, providing coverage for “property damage” claims the insured becomes legally obligated to pay if the damage “is caused by an ‘occurrence’ that takes place . . . during the policy period.” Citing to clear authority that “[w]hen parties dispute the identity of the operative ‘occurrence’ for purposes of coverage, the actual damage to the party asserting the claim, not the wrongful act that precipitated that damage, triggers the ‘occurrence.’”
Accordingly, the court concluded that “the actual, cognizable damage to plaintiffs’ property occurred after the renovations were completed and the ‘severe cracking, shifting and other major deficiencies began to develop,” which was well after the coverage at issue was cancelled, there was no covered property loss during the policy period and summary judgment was appropriate.
DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in insurance coverage matters. For additional information about the matters in this bulletin or in the firm’s insurance practice, please contactSteven A. Kunzman, Esq. who heads our Insurance Coverage Group.
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