Two insurers covering consecutive policy periods pointed the finger at one another regarding a loss caused by a leak. The court determined the policy in place when the leak occurred, not when the plumbing was installed, was triggered. See Alliance Mut. Ins. Co. v. Guilford Ins. Co., 2011 WL 883528 (N.C. App. March 15, 2011).
Beginning in September 2004, Premier Plumbing did the plumbing work in a new home under construction. Premier was insured by Guilford from February 21, 2004 to February 21, 2005. Alliance assumed coverage for Premier beginning February 2005.
The house was purchased in April 2005. On December 27, 2006, the home was flooded when a water supply line to the laundry room sink separated. Prior to December 2006, the homeowner had used the sink once a week and had never noticed any leakage.
Allstate, the homeowner's insurer, paid the claim for damage due to the defective installation of the water supply line. Allstate then filed a subrogation action against Premier. Alliance defended Premier, but also demanded that Guilford undertake its duty to defend and indemnify Premier. Guilford contended the loss occurred after its policy had expired, and refused to defend or indemnify.
Alliance filed for a declaratory judgment against Guilford. The trial court granted Guilford's motion for summary judgment and Alliance appealed.
The appellate court affirmed. The court disagreed with Alliance that the date the piping was installed determined which policy was triggered. Instead, the key was the date the property was damaged or the event occurred. Even if it was assumed that the date of improper installation of the water supply line was the date of the "occurrence," the "property damage" - the water leak and flooding of the house - did not occur "during the policy period."
Unlike Hawaii's seminal case on continuing property damage, Sentinel Ins. Co., Ltd v. First Ins. Co. of Hawaii, Ltd., 975 P.2d 894 (Haw. 1994), this case did not involve a continual leak which began in 2004 and was not discovered until December 2006; instead, the leak began in 2006.
In Sentinel, the leak was continuous and ongoing through several policy periods. Further, there was no determination as to when the leak commenced. Consequently, the court utilized the injury in fact trigger and found all policies during which the ongoing leak occurred were triggered. Sentinel Ins., 875 P.2d at 918.
