Another Chapter In the Ongoing Debate Over Coverage For Continuing and Ongoing Damage
Property damage often results from a continuous and ongoing process occurring an extended period of time rather than from a discrete event such as a windstorm or earthquake. Where damage is continuous and ongoing, there are often disagreements and disputes as to when the property damage “occurred” to trigger coverage under a particular insurance policy. Although Washington courts have addressed this issue in the past in cases such as Gruol Construction Company, Inc. v. Insurance Company of North America, 11 Wn. App. 632, 524 P.2d 427 (1974), and American National Fire Insurance Company v. B & L Trucking and Construction Company, 134 Wn.2d 413, 951 P.2d 250 (1998), insurers and insured continue to litigate over whether or not particular continuous damage “occurred” during a particular policy period.
The Washington Court of Appeals (Division III) ruled on another of these disputes earlier this week in Walla Walla College v. Ohio Casualty Insurance Company, ___ P.3d ___, 2009 WL 987405 (April 14, 2009) (.pdf). The case stemmed from the failure of an underground gasoline storage tank in September 2001 at Walla Walla College. The party that sold and installed the tank in 1991 did not properly backfill the soil below the tank which, over a period of years, placed stress on the tank and ultimately led to its failure. The tank seller and installer was insured by Ohio Casualty Insurance Company from 1990 to 1992. After the college filed suit against the tank seller/installer, a declaratory judgment action was initiated to determine whether the Ohio Casualty polices covered the College’s losses.
The College argued that there was coverage because the improper intallation took place during the policy period and the damage to the tank first started immediately after installation. After discussing Gruol and B&L Trucking as well as Villella v. Public Employees Mutual Insurance Company, 106 Wn.2d 806, 725 P.2d 957 (1986), Division III rejected the College’s arguments for coverage because: (1) there had been not been any actual injury at all until long after policy expiration; and (2) even if one were to accept that the stress to the tank occurring during the policy period constitutes property damage, such damage would be excluded from coverage because it would be damage to the insured’s own work. In reaching this conclusion, Division III relied upon the following reasoning from Wellbrock v. Assurance Company of America, 90 Wn. App. 234, 243,951 P.2d 367 (1998):
The coverage-triggering “occurrence” refers to the event causing injury to the complaining party, not the earlier event that created potential for future injury.
Insurers and insured will continue to debate for the foreseeable future what constitutes an injury triggering coverage.
