The Seventh Circuit Court of Appeals predicted that the Wisconsin appellate courts would apply the continuous injury trigger to find coverage after the policy expired for damage caused by water infiltration. Strauss v. Chubb Indem. Ins. Co., 2014 U.S. App LEXIS 21794 (7th Cir. Nov. 18, 2014).
The insureds built their home in 1994. They purchased coverage for their home from Chubb. Coverage was in place from October 1994 through October 2005. The policy stated that coverage was limited "only to occurrences that take place while this policy is in effect." "Occurrence" was defined as "a loss or accident to which this insurance applies occurring within the policy period. Continuous or repeated exposure to substantially the same general conditions unless excluded is considered to be one occurrence."
In October 2010, the insureds discovered that water infiltration had been causing damage within the building envelope of the home. The infiltration was ongoing, beginning around the time of original construction and continuously occurring with each subsequent rainfall. Chubb denied coverage because the damage was not discovered during any of their policy periods.
The insureds sued and the district court found that the continuous trigger theory applied to the "occurrence based" policy because ongoing losses were covered.
On appeal, Chubb argued that the manifest trigger theory applied. Chubb contended the the continuous injury trigger should only apply to third-party coverage cases and that the manifestation trigger was the only trigger suitable to analyzing first-party property policies.
The Seventh Circuit noted, however, that Wisconsin courts hold that the policy language guided the analysis and determined whether coverage existed. The provisions in the Chubb policy required the application of the continuous trigger theory. The policy covered "all risk of physical loss to the house or other property covered under this part of the Policy, unless stated otherwise or an exclusion applies." The policy applied "only to occurrences that take place while this policy is in effect." Therefore, coverage was triggered when a loss "occurrence" took place during the policy's term. Once such an occurrence took place, the policy protected against "all risk of physical loss" to the home. The latent water infiltration constituted a single occurrence under the policy. Because the policy covered all risk of physical loss, the water damage triggered coverage.