I would like to consult or ask you for your opinion on a commercial general liability coverage issue.
Antilles Insurance Company wrote a general liability policy (CG 00 01 04 13) for a residential condominium association. The condominium unit owner's association and its board of directors were sued by one disgruntled unit owner which alleges that over the years his apartment has sustained water filtration/seepage and humidity damages originating from the common elements of the condominium. The unit owner also alleges structural deficiencies associated with the construction of the condominium have contributed to the alleged damages to his apartment. In the suit itself, the unit owner states he hired the services of an expert witness whose written report expresses the following; "water infiltrating through cracks and joints are the major structural deficiencies that allow the intrusion of water promoting rust and moisture straining including mold to the apartment". Finally, the unit owner alleges that over a period of approximately two(2) years the unit owner's association has been negligent by failing to remedy, act and properly maintain the common elements of the condominium. As a result of the damages the unit owner cites him and his family have suffered amongst others, health risks (associated with mold), loss of use, mental anguish and loss of property value (depreciation).
Antilles has denied coverage and/or the duty to defend based exclusively on the fact that the allegations do not fall within the definition of an "occurrence" as there has been no accident. Webster dictionary defines an accident as an "unforeseen and unplanned event". Our position is that the alleged structural deficiencies brought up by the unit owner himself are the proximate or primary cause of the alleged damages which will certainly result in foreseen events (such as water seepage) thus, it is our understanding that the event or series of events which caused damages to the apartment do not meet the policy definition of an accident.
We would like to know your opinion on whether you agree with us on this subject matter and/or whether you believe coverage could apply in which case we will defend the insured under a reservation of rights letter.
Puerto Rico Subscriber
Based on the information you've provided we would have to agree that the water damage does not meet the definition of occurrence, meaning an accident, including the continuous or repeated exposure to substantially the same general harmful conditions. This determination is based on the allegations in the suit that the insured was made aware of the structural deficiencies and the expert witness written report expressing the following; "water infiltrating through cracks and joints are the major structural deficiencies that allow the intrusion of water promoting rust and moisture straining including mold to the apartment".
This is not to say the insured does not have liability in the suit, but that based on the information this would not meet the definition of an "occurrence" under the CGL.