The seller's alleged negligent misrepresentation about the condition of the house was not covered by the homeowner's and umbrella policies. Allstate Ins. Co. v. Swaminathan, 2017 U.S. Dist. LEXIS 211931 (D. Conn. Dec. 27, 2017).
The insureds owned a home insured by Allstate under both a homeowner's and umbrella policy. They sold the house to Kristin Cole. Thereafter, Cole discovered that concrete in the home had been deteriorating for years and would need to be replaced.
Cole sued the insureds, alleging they knew or should have known about the condition of the concrete and that the concrete houses in the area had been deteriorating. Further, the insureds used a sealer to conceal the problem and failed to disclose it.
Allstate denied the claim and filed suit for a declaratory judgment that it had no duty to defend or indemnify. Allstate then moved for summary judgment.
The homeowner's policy provided coverage for claims "because of bodily injury or property damage arising from any occurrence to which this policy applies." The underlying lawsuit did not hinge on the deteriorating concrete itself, but rather on the insureds' intentional or negligent misrepresentations about the condition of the concrete. None of the allegations in the complaint asserted property damage or bodily injury covered by the homeowner's policy. Instead, Cole sought damages related to the insureds' fraudulent or negligent misrepresentation of the condition of the concrete supporting the house. Therefore, Cole's injury stemmed from the insureds' alleged deception, not from the property damages that preceded the misrepresentations. Allstate had no duty to defend the insureds under the homeowner's policy based upon the alleged misrepresentation.
Nor was there coverage under the umbrella policy. The policy did not cover intentional acts or damage that the insured could have reasonably expected to result from an insured's intentional conduct.