Today, the Indiana Court of Appeals issued an interesting opinion in which it found that two different insurance policies covering two different periods in time could be liable for the same damage. In
, Case No. 29A02-1008-PL-965, the Court found this was possible because the damage caused by the insured occurred during both policy periods and that when the damage occurred triggered coverage under the policies.
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In this case, the insured of both Grange and West Bend (McCurdy) was a subcontractor on a building project, who was hired to install the sanitary sewer, domestic water and storm piping, roof drains, plumbing fixtures, and the HVAC system at the school. McCurdy completed his work in May 2005. In June 2006, the school experienced significant water damage because McCurdy had fractured a storm drain pipe during the winter or spring of 2005. West Bend provided commercial general liability (CGL) insurance to McCurdy from May 23, 2004 until May 23, 2005. Grange was McCurdy’s CGL insurance carrier from May 23, 2005 to May 23, 2007. Each of their policies contained the same language:
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of ... "property damage" to which this insurance applies ... .
b. This insurance applies to ... “property damage” only if:
(1) The ... "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
(2) The ... "property damage" occurs during the policy period; and
(3) Prior to the policy period, no insured… and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the ... "property damage" had occurred, in whole or in part….
c. "[P]roperty damage" which occurs during the policy period and was not, prior to the policy period, known to have occurred…, includes any continuation, change or resumption of that ... "property damage" after the end of the policy period.
Grange and West Bend could not agree on which of them covered the damage, so West Bend filed a declaratory action to resolve the dispute. The trial court entered judgment for West Bend.
On appeal, Grange argued that the date of the occurrence was when the storm drain pipe was fractured, but the Court disagreed, finding that the pertinent consideration is the timing of the property damage because the policies require that the damage occur during the policy period, not the timing of the occurrence. Because damage occurred during Grange's policy period, its policy covered that damage.
However, "[c]overage under Grange's policy, however, does not equate to lack of coverage under
West Bend's policy."
[W]e agree that the time of the damage, as opposed to the time of the alleged negligent conduct that caused the damage, is the triggering event. We do not agree, however, that no damage occurred during West Bend's policy period to trigger coverage under its policy with McCurdy. Although the damages resulting from McCurdy's negligence became apparent only after they evolved over time, some damage clearly resulted when the drain pipe was fractured, which was within West Bend's policy period. ... [W]e hold that because the West Bend policy was triggered at the time McCurdy negligently fractured the drain pipe, the policy covers all damages that flowed from the original damage, including the extensive flood damage.
In sum, the undisputed facts establish that both policies were triggered in the instant case. The first policy, West Bend's, was triggered by the original fracturing of the storm drain pipe which resulted in immediate damage to the pipe and the subsequent flooding. The second policy, Grange's, was triggered by the flood damage that occurred during its policy period. Thus, both policies cover the flood damage at issue.
On remand, the trial court was "directed to apportion damages accordingly." The Court gave no guidance on how this should be accomplished.
In dissent, Judge May disagreed. She would have held that Grange (as the second policy) should not have to cover any of the damages, if the West Bend policy covers all damages. In a footnote, the majority disagreed:
We see nothing inconsistent in holding that two policies can be triggered to cover the same damage. To be sure, both policies at issue contain other insurance clauses addressing instances where two primary insurance policies cover the same loss. The determination of whether the Grange policy was triggered is not controlled by our determination of coverage under another policy. The Dissent would have us wholly ignore the express language of the Grange policy, which we will not do.
Thus, if damages from a single occurrence manifest over a period of time, insurance policies covering each period of time may be responsible for coverage of all of those damages.
