Home insurance

April 24, 2013

Excavation work that uncovers hazardous materials triggers insurance coverage

Source: http://www.lexology.com, April 12, 2013
By: David Erickson and Mark Anstoetter, Shook Hardy & Bacon LLP

A federal court in New York has held that uncovering buried hazardous substances during excavation constitutes a “sudden and accidental” release thus triggering insurance coverage. Narragansett Elec. Co. v. Am. Home Assurance Co., No. 11-CV-8299, (S.D.N.Y. 4/1/13). At issue was a Massachusetts gravel pit at which hazardous substances had been deposited at some time between 1930 and 1945 by a corporate predecessor of plaintiff Narragansett Electric Co. (Narragansett). Excavation conducted in 1984 uncovered the buried hazardous substances and, according to Massachusetts, “caused hazardous chemicals to be released to the environment.”

The state sued Narragansett, asserting that the company was liable for remediation of the contamination. Narragansett sought insurance coverage for its defense of the state’s lawsuit, but the insurer asserted that under the policy’s pollution exclusion, it had no duty either to cover losses or pay defense costs. Narragansett asserted that an exception to the pollution exclusion, which provided coverage in the event of pollution arising from a “sudden and accidental” occurrence, meant that the insurer had a duty to defend.

Ruling in Narragansett’s favor, the court found that the excavation which disturbed the deposited substances was an intervening event that was temporally sudden and was accidental “in the sense that it was an unexpected and unintentional consequence of excavation occurring outside the insured’s regular business activities and the Site’s function as a sand and gravel pit.” The court determined that the insurer owed its insured the costs of defense under these circumstances.


January 15, 2013

Virginia Supreme Court construes four exclusions as barring coverage in first-party Chinese drywall claim

Source: http://www.lexology.com, January 7, 2013
By: John David Dickenson and Matthew Criscuolo, Edwards Wildman Palmer LLP

On November 1, 2012, the Virginia Supreme Court issued its opinion in TravCo Insurance Company v. Ward,1 and became the first state high court to determine that several exclusions contained within a homeowners’ insurance policy were applicable and barred coverage for damages associated with Chinese Drywall. Specifically, the Court considered whether damages allegedly caused by Chinese Drywall fell within one or more of the following policy exclusions: (i) latent defect; (ii) faulty, inadequate, or defective materials; (iii) rust or corrosion; or (iv) pollutants. Applying traditional contract principles as well as those doctrines particular to insurance policies, the Court held that all four exclusions applied to bar coverage under a homeowners’ insurance policy.

Factual Background

Like many Americans during the recent housing boom, in May 2007, Larry Ward purchased a newly constructed home in Virginia Beach built using drywall imported from China. Mr. Ward purchased a homeowners’ insurance policy through TravCo Insurance Company, and renewed the policy for the next two years. About two years after he bought the home, beginning in May 2009, Mr. Ward and his family began to experience problems, including health issues and property damage.2 Mr. Ward hired an expert, Zdemek Hejzlar, Ph.D., who determined the home’s Chinese Drywall was to blame.3 Dr. Hejzlar has a doctorate in Occupational Safety and Health Engineering and has investigated hundreds of homes and condominiums reporting problems associated with Chinese Drywall.4 Armed with the results of Dr. Hejzlar’s findings, Mr. Ward commenced a lawsuit in Virginia state court against the developer, builder and drywall contractor for his home, alleging claims for breach of contract, breach of warranties, negligence, unjust enrichment, nuisance, and other counts claiming that his home “was built with defective drywall.”5…

December 5, 2012

Virginia Supreme Court Rules TravCo Homeowners’ Policy Does Not Cover Chinese Drywall Claim

Source: BestWire Services, November 15, 2012
Posted on: http://envfpn.advisen.com

The Virginia Supreme Court has ruled TravCo Insurance Co.’s “all-risk” homeowners’ insurance policy did not cover claims regarding defective Chinese drywall.

The case was filed by Larry Ward, who bought a home in Virginia Beach and a homeowners insurance policy from TravCo in 2007 that was later renewed through 2010. In 2009, Ward experienced problems with the home that an expert related to Chinese drywall and filed a claim with TravCo saying the drywall caused health issues and damaged his air conditioning system, garage door and flat screen televisions. TravCo denied the claim, saying the damage was excluded from coverage by the terms of Ward’s policy, which excluded losses caused by latent defects; faulty, inadequate, or defective materials, rust or corrosion; and pollutants, defined to include any gaseous irritant or contaminant.

TravCo then went to the U.S. District Court for the Eastern District of Virginia, asking the court to throw out the claim based on the exclusions in the policy and it did so. Ward appealed to the U.S. Fourth Circuit, which put the questions concerning whether drywall damage is excluded from the “all-risk” policy to the Virginia Supreme Court. Attempts to get comment from TravCo were unsuccessful.

In the Nov. 1 ruling, the court said Virginia insurance contract interpretation governed the case and said the plain language of the insurance policy showed that “each of the four exclusions is unambiguous and excludes damage resulting from the Chinese drywall from coverage.” The ruling said the homeowners policy latent defect exclusion provides that TravCo did not insure for loss caused by “latent defect, inherent vice, or any quality in property that causes it to damage or destroy itself.”…

November 7, 2012

VA court rules on insurance coverage for drywall damages

Read here about a Virginia Supreme Court ruling that homeowner’s insurance does not cover damages from Chinese drywall.


April 27, 2012

New Day Policy Review Results in Coverage Enhancements At Reduced Rate

New Day was asked by the retail broker to review the current combined professional liability/pollution liability policy for a large mechanical contracting client, suggest coverage enhancements and market the account at renewal to ensure that the client received the broadest coverage at the best price. The retail broker advised which carrier’s were previously approached for this account and most of them were not appropriate for this type of risk. New Day explained the marketing strategy for renewal and why each carrier was being approached and the retail broker understood and accepted the strategy. New Day obtained a competitive alternative quote and leveraged that alternative to negotiate significant coverage enhancements with the incumbent carrier at a decreased rate. Those coverage enhancements included:

  • Rectification Coverage
  • Mitigation of Loss Coverage
  • Environmental Impairment Liability for the Insured’s Owned Locations
  • Punitive Damages Coverage

New Day’s proposal outlined the coverage enhancements in detail enabling the retail broker to explain them to the insured and resulting in the incumbent carrier retaining the business despite a 20% premium differential.…

September 24, 2010

Bed Bugs May Bite Insurers But Won’t Dog Industry

Publication Date:  09/02/2010
Source:  Marketwatch

SAN FRANCISCO (MarketWatch) — When dogs bite people, insurers often pay. But what happens when bed bugs bite?

Bed bug infestations in the U.S. have multiplied at an alarming rate in recent years.

A recent survey of almost 1,000 pest exterminators found that 95% of the firms had dealt with a bed bug infestation in the past year. That was up from 25% of firms in surveys conducted before 2000. The National Pest Management Association, which did the surveys with the University of Kentucky, described the trend as a pandemic.

Bed bugs are more difficult to get rid of than cockroaches, ants and termites, so it costs thousands of dollars to clean them up.

Big companies, including TimeWarner Inc., TWX, have been hit with infestations. …

July 27, 2010

Insurer to Pay $17.5 Million in Faulty Construction Claim

The insurer that issued the performance bond for a portion of the troubled Interstate-84 construction in Connecticut will pay $17.5 million to settle claims involving installation of defective drains. The payment from the insurer on behalf of the primary contractor for the project will allow the state to begin repairing the defective drains along a three-mile stretch of highway. Many of the defective drains lead nowhere or are clogged with debris, with others connected with substandard, cracked and leaking pipes. The state estimates that it will cost $27 million to repair them. Under the agreement, the state retains the right to sue the contractor for additional funds. The contractor has already been sued by its insurer, who accuses the firm of concealing funds and purchasing luxury cars with company resources.…