The insurer promoted a variety of arguments for summary judgment to deny coverage for water damage under a homeowner's policy. Strauss v. Chubb Indem. Ins. Co., 2013 U.S. Dist. LEXIS 224 (E.D. Wis. Jan. 2, 2013).
Construction of the insureds' home was completed in 1994. In October 2010, they discovered water damage in the house. Claims were submitted to Chubb. Chubb had insured the home for a period of years before the insureds located the water damage. Chubb paid $85,290.05 in connection with the water damage, but asserted there was no additional amount due.
The insureds sued for a declaratory judgment. Chubb moved for summary judgment, arguing the damage first manifested many years after the last policy issued by Chubb and that Wisconsin followed a "manifestation trigger" for first-party property policies. This meant that only the policy in effect when the loss manifested was required to respond. Further, Chubb argued that various exclusions barred coverage for the water damage.
The court noted that Chubb boldly asserted that the "manifestation trigger" was applicable in first-party insurance coverage cases in Wisconsin. The court disagreed because there was no Wisconsin state court precedent applying the "manifestation trigger" to first-party property insurance cases.
Turning to the exclusions, Chubb argued that loss caused by faulty, inadequate or defective planning was barred from coverage. Ensuing covered loss was insured, however, unless another exclusion applied.
The insureds agreed that this exclusion applied to some extent, but coverage was otherwise provided under the ensuing loss provision. The court noted that if certain exterior damage to the house was caused by faulty workmanship or materials, such damage was excluded. There were genuine issues of fact with regard to the claimed losses to exterior pieces of the house. If interior damage to the house was caused by rainwater infiltration in conjunction with faulty workmanship, that damage would be deemed to be a loss ensuing from the excluded loss caused by faulty workmanship as a matter of Wisconsin law.
On the state of the current record, the court concluded that genuine disputes of material fact remained as to which "risks" "caused" the homeowners' claimed and uncompensated ""direct physical" losses to the interior the house. Accordingly, Chubb's motion for summary judgment was denied.
