When property damage manifests before the policy period, but continues over time and overlaps the CGL's policy period, does the policy provide coverage? Applying Florida law, the U.S. District Court determined that under the manifestation trigger, there was no coverage. See Amerisure Ins. Co. v. Albanese Popkin The Oaks Development Group, L.P., 2010 U.S. Dist. LEXIS 125918 (S.D. Fla. Nov. 30, 2010).
The homeowners sued the insured developer for damages arising from the installation of Chinese drywall. The homeowners purchased their home from the insured on November 23, 2004. The homeowners moved into their home on October 6, 2006. Their complaint against the insured alleged property damage was sustained within the building and caused by the release of fumes and vapors from the Chinese drywall. The homeowners initially discovered the fumes and vapors in December 2006. Further property damage to air handling units, electrical wiring, metals and plumbing fixtures was noticed as late as April and May 2009. In September 2009, the homeowners discovered the cause of the property damage, the Chinese drywall.
Amerisure issued a CGL policy to the developer for the policy period January 16, 2008 to January 16, 2009. The policy applied to property damage only if prior to the policy period, no insured knew that the property damage had occurred. If an insured knew property damage had occurred prior to the policy period, then any continuation of property damage during or after the policy period would deemed to have been known prior to the policy period.
Amerisure sought declaratory relief on its coverage obligations and moved for summary judgment. The federal court noted that under Florida case law, the time of occurrence within the meaning of an "occurrence" policy was the time at which the injury first manifested itself. The underlying complaint alleged that the homeowners first noticed damage and odor stemming from the Chinese drywall in 2006, prior to the Amerisure policy. Throughout 2008 and into the summer of 2009, additional damage to the air handling units was observed. Nevertheless, the homeowners admitted that they first noticed the damage prior to the policy period.
Therefore, there was no property damage alleged during the policy period. The fact that the damage was continuous in nature was irrelevant under the manifestation trigger. Consequently, there was no coverage or duty to defend, and the motion for summary judgment was granted.
Hawaii has adopted the injury-in-fact trigger, whereby coverage is triggered by the actual occurrence during the policy period of an injury-in-fact. See Sentinel Ins. Co. v. First Ins. Co., 875 P.2d 894, 915 (Haw. 1994). Under the injury-in-fact trigger, "an injury occurs whether detectable or not; in other words, an injury need not manifest itself during the policy period, as long as its existence during that period can be proven in retrospect." Id. Had the injury-in-fact trigger applied in Amerisure Ins. Co., there likely would have been coverage.
