Water Damage Occurring Over Several Year Period Can Be “Occurrence” Covered Under Insurance Policy — Part 2

Shaun Marker | Property Insurance Coverage Law Blog | December 8, 2014

As a follow up to the November 24, 2014 post titled, Water Damage Occurring Over Several Year Period Can Be “Occurrence” Covered Under Insurance Policy, Chubb has apparently filed a motion for rehearing. Recall this is the case where progressive water damage occurring over a sixteen year period was deemed a covered “occurrence” based on the language chosen by Chubb for its policy and Wisconsin’s “continuous trigger” theory.1

Law360, an industry insurance news publication, has reported that:

Some industry groups, including the American Insurance Association and the Property Casualty Insurers Association of America, have denounced the decision, saying in a proposed amicus brief filed Tuesday in support of Chubb’s motion for rehearing that the panel’s use of the continuous trigger theory could potentially expose property insurers in Wisconsin to “risks from the distant past they did not contemplate and for which they have charged no premium.”2

However, policyholder representatives would be quick to point out that the 7th Circuit explained that it was the language chosen by Chubb in its policy that the Court is enforcing. Insurers may choose the language of their policies as the drafters of insurance policies. The Court also pointed out if it would not reward “sloppy drafting” of the policy that defined “occurrence” as continuous or repeated exposure to substantially the same general conditions.

Whichever side of the fence you are on, the decision could have wide reaching effects for insurers whose policies are worded with similar language to the Chubb policy involved in the case.

We will continue to monitor the case and will provide updates whether the motion for rehearing is granted and if there are any other changes to report involving this important case.

1 Strauss v. Chubb Indem. Ins. Co., — F.3d —, 2014 WL 6435314 (7th Cir. Nov. 18, 2014).

2 Jeff Sistrunk, “7th Circ. ‘Trigger’ Ruling May Up Risks For Property Insurers,” Law360, (www.law360.com, subscription required) December 4, 2014.

via Water Damage Occurring Over Several Year Period Can Be “Occurrence” Covered Under Insurance Policy — Part 2 : Property Insurance Coverage Law Blog.