Hunton Insurance Recovery Blog

The Appellate Division of the Superior Court of New Jersey recently ruled in Cypress Point Condominium Association, Inc. v. Adria Towers, L.L.C.¹ that consequential damages to the common area and units of a condominium complex caused by a subcontractor’s defective work constituted “property damage” and an “occurrence” under the building developer’s standard-form CGL policies, even though the policies were unlikely to cover direct damages like replacement costs. The case serves as a reminder that not all damages are treated alike by insurance policies, and policyholders therefore should not assume that an adverse determination as to one type of loss will apply to all resulting loss.

On May 27, 2015, the First Circuit Court of Appeals in Cardigan Mountain School v. New Hampshire Ins. Co., CV 14-2182, 2015 WL 3393771 (1st Cir. May 27, 2015), held that the policyholder, sufficiently pled a plausible case that an insurance policy had been issued by New Hampshire Insurance Company for the period 1967–1968, even though neither party could locate the policy.  The decision demonstrates a favorable application of the “plausibility” pleading standard articulated by the Supreme Court in Ashcroft v. Iqbal and Bell Atlantic Corp. v. Twombly, in the murky context of a lost insurance policy case.

The Eleventh Circuit recently ruled, applying Alabama law, that a breach of warranty claim constitutes an “occurrence,” triggering coverage under a general liability insurance policy, and that the policy’s contractual liability exclusion does not bar coverage from any resulting liability. See Pa. Nat’l Mut. Cas. Ins. Co. v. St. Catherine of Siena Parish, No. 14-12151, 2015 U.S. App. LEXIS 9659 (11th Cir. June 10, 2015). The decision underscores that coverage exclusions must be construed narrowly and in favor of coverage, and that insurers must use precise language when they seek to exclude coverage for a particular type of exposure.