The South Carolina Supreme Court held that continuing damage that was part of a continuum of property damage constituted an "occurrence." Auto-Owners Ins. Co. v. Rhodes, 2013 S.C. LEXIS 248 (Sept. 25, 2013).

   Rhodes hired Eadon to design, fabricate, and erect three outdoor advertising signs on Rhodes' property bordering an interstate highway. After the signs were erected, one fell across the highway, blocking both lanes of southbound traffic. The state Department of Transportation ordered Rhodes to remove the remaining two signs and revoked Rhodes' permit to maintain signs on the property. 

   Rhodes sued Eaton. Eaton's insurer, Auto-Owners, filed a declaratory judgment action to determine whether there was coverage under the CGL policy. The trial court found the sign falling on the interstate constituted an "occurrence" that resulted in damages beyond the defective work to property other than the defective work itself. Further, the loss of use of the remaining two signs and the consequential damages flowing therefrom were causally linked to the sign that fell and also constituted property damage caused by an occurrence.

   The Court of Appeals affirmed. The South Carolina Supreme Court granted certiorari.

   Auto-Owners conceded that the falling of the first sign constituted an "occurrence." But the issue was whether the loss of the remaining two signs and the consequential damages were causally linked to the sign that fell, and thus constituted property damage caused by an occurrence. Prior case law held that defective construction resulting in damage to otherwise non-defective components could constitute "property damage," but the defective construction itself would not. 

   Here, the removal of the two additional signs mandated by the Department of Transportation was more tangential than the normal defective construction case where damage from faulty workmanship was obvious and directly related. 

   Nevertheless, the Court determined that the fallen sign and the removal of the remaining two signs was a continuum of an "occurrence." The existence of an "occurrence" from the removal of the remaining two signs would not have occurred but for the fallen sign as this accident precipitated the mandate issued by the Department of Transportation. Because the signs were simultaneously constructed, it was a single occurrence with progressive damage.