UMBRELLA POLICY HELD APPLICABLE TO INSURED'S NEGLIGENCE FOR PROPERTY DAMAGE OCCURRING YEARS LATER

UMBRELLA POLICY HELD APPLICABLE TO INSURED'S NEGLIGENCE FOR PROPERTY DAMAGE OCCURRING YEARS LATER 275_C008

UMBRELLA POLICY HELD APPLICABLE TO INSURED'S NEGLIGENCE FOR PROPERTY DAMAGE OCCURRING YEARS LATER

The issue in this case was whether a commercial umbrella liability policy covered claim arising from a fire that destroyed a grain elevator sixteen years after the termination of the policy. The policy had been in effect one year. The fire was attributed to the insured's negligent installation of a heat detection and fire suppression system during the policy term. The grain elevator company's property insurer, exercising its subrogation rights after paying the fire loss, sued the installer (the umbrella insured) for approximately $2.5 million.

The insured sought defense from the insurer that had issued its 1976-77 umbrella policy. The insurer denied liability because the damage and the lawsuit occurred sixteen years after the policy expiration. The insured initiated legal action for a declaration of coverage, whereupon the insurer filed a motion for summary judgment. The trial court determined that the policy was not applicable to the damage and claim that occurred many years later. The insured appealed from the court's grant of the insurer's summary judgment motion and dismissal of the insured's action.

On appeal, the insurer argued that there was not a covered "occurrence" during the policy period; that the fire in 1993 was the "occurrence," and outside the policy period. The insured argued that the allegedly defective installation of the equipment was the "occurrence."

The appeal court noted that "occurrence" was defined in the policy as "....an event, including continuous or repeated exposure to conditions, which result in Personal Injury or Property Damage neither expected nor intended from the standpoint of the insured." (There was no reference to date of loss or claim.)

The court concluded that the policy under review was an "occurrence" policy that provided protection for acts performed during the policy period, as distinguished from a "claims-made" policy, covering claims made during the term of the policy.

The judgment of the trial court was reversed in favor of the insured and against the insurance company. The policy was found applicable.

(JENOFF, INCORPORATED, Appellant v. NEW HAMPSHIRE INSURANCE COMPANY, Respondent. Minnesota Court of Appeals. No. C3-95-2409. April 2, 1996. CCH 1996 Fire and Casualty Cases, Paragraph 5653.)