Property Damage Occurs when it Manifests Itself

The United States District Court in Florida ruled on a coverage dispute centering around when property damage occurred. The timing of the occurrence determined whether the insurer had a duty to defend its insured in an underlying claim based on Chinese drywall problems. This case is Amerisure Insurance Company v. Albanese Popkin, 2010 WL 4942972 (S.D.Fla.).

 

Amerisure initiated this action against its insured seeking a declaratory judgment that it is not liable to either defend or indemnify Albanese Popkin in connection with a lawsuit filed against Albanese in a Florida state court. Albanese had been sued by the Goddards who claimed that, as the builder of their home, Albanese installed Chinese drywall and this caused property damage to the house. The Goddards alleged the drywall released gases and fumes throughout the house that corroded outlets, air conditioning coils, wiring, and plumbing fixtures, and further that the drywall caused a sulfur odor that permeated the house.

 

The district court noted that Amerisure issued a commercial general liability policy to Albanese with a policy period of January 16, 2008 through January 16, 2009. The Goddards initially discovered damage to the air conditioning coils in December 2006. Damage to the plumbing and electrical wiring was discovered sometime between April and May 2009. And it was not until the summer of 2009 that the Goddards discovered the cause of the property damage, that is, the Chinese drywall.

 

Amerisure argued that the Goddards first noticed damage and an odor stemming from the drywall in 2006, prior to the inception of the policy provided to Albanese; as a result, Amerisure contended that it was not required to defend or indemnify Albanese. The insured argued that the damage was continuous and that its first manifestation is not the crucial trigger. The court stated that there are four trigger of coverage theories generally accepted: exposure; manifestation; continuous trigger; and injury in fact. In Florida , the general rule followed by courts is that the time of an occurrence is the time at which the injury first manifests itself.

 

Comparing the complaint filed by the Goddards with that generally accepted rule, the court found that the Goddards admitted that they first noticed the damage prior to the policy period, that is, in December 2006. Therefore, the damage alleged occurred prior to the effective date of the policy and the insurer had no duty to defend or indemnify the insured. Manifestation of the damage is relevant in this context because it establishes that the Goddards sustained actual damage before the policy in question became effective. The fact that the damage was continuous in nature was found by the court to be irrelevant to the analysis.

 

The motion by Amerisure for summary judgment was granted.

 

Editor's Note: Questions arise from time to time as to when property damage occurs in relation to insurance coverage for a claim. There are four recognized trigger of coverage theories used by courts today (as this court states): manifestation, continuous trigger, exposure, and injury in fact. Florida courts follow the general rule that the time of occurrence of property damage is when the damage first manifests itself. The U.S. District Court in this case followed that rule and found that the damage occurred, that is, manifested itself, prior to the inception of the policy period. In accordance with this finding, the court stated that the continuous nature of the damages after this point in time was irrelevant.