{"id":891043,"date":"2016-09-29T13:01:03","date_gmt":"2016-09-29T19:01:03","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=891043"},"modified":"2016-09-29T13:01:03","modified_gmt":"2016-09-29T19:01:03","slug":"oregon-federal-court-endorses-broad-definition-property-damage","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/oregon-federal-court-endorses-broad-definition-property-damage\/","title":{"rendered":"Oregon Federal Court Endorses Broad Definition of \u201cProperty Damage\u201d"},"content":{"rendered":"

David Delmar | The Policyholder Report<\/a> | July 28, 2016<\/p>\n

In a recent case, Oregon Shakespeare Festival Ass\u2019n v. Great American Ins. Co<\/em>., the \"6162007610_b92e89e087_z\"federal District Court for the District of Oregon adopted a liberal interpretation of \u201cproperty damage.\u201d The Oregon Shakespeare Festival Association (OSF) suffered a loss during its season: nearby wildfires caused smoke to infiltrate a partially outdoor theater where performances were being held, necessitating cancellations.<\/p>\n

OSF\u2019s insurance\u00a0policy covered \u201cdirect physical loss or damage\u201d to its property and the \u201cactual loss of Business Income\u201d caused by such loss or damage. To get coverage for the business losses it sustained by cancelling performances, OSF had to show that the smoke infiltration, the undisputed reason for the cancellations, was \u201cdirect physical loss or damage\u201d to property.<\/p>\n

OSF argued that \u201cphysical loss or damage\u201d means \u201cany injury or harm to a natural or material thing.\u201d\u00a0<\/i>Great American, OSF\u2019s insurer, argued that air is not \u201cproperty\u201d and that covered damage must be \u201cphysical\u201d\u2014 not just smoky air.\u00a0The court agreed with OSF, finding\u00a0that Great American\u2019s definition was too restrictive. There was nothing in the policy, the court said, to suggest that contaminated indoor air is not covered, nor could Great American explain why air is not \u201cphysical\u201d:<\/p>\n

[W]ildfire smoke infiltrated the interior of the theater, making it uninhabitable and unusable for holding performances \u2026 Even though the loss or damage was not structural or permanent, the property experienced a loss of \u201cessential functionality\u201d \u2026 Based on the case law, as discussed above, the Elizabethan Theatre sustained \u201cphysical loss or damage to property\u201d when the wildfire smoke infiltrated the theater and rendered it unusable for its intended purpose.<\/p><\/blockquote>\n

The court\u2019s analysis suggests that a condition indirectly affecting property \u2014 that is, a condition preventing the intended use of property even if it does not necessarily damage the property itself \u2014 is \u201cphysical loss or damage.\u201d<\/p>\n

This broad interpretation has implications for both\u00a0first-party and liability insurance claims, and could trigger coverage in a wider array of contexts. For example, under this interpretation wetting of gypsum board sufficient to affect its supportive function would be covered property damage. Even active leaks could qualify as property damage, since water intrusion in wall assemblies or interior living spaces is analogous to wildfire smoke in a partially enclosed outdoor theater.<\/p>\n

Ball Janik will continue to track the development of the state of the law on this issue. We suggest that those who may have suffered losses along these lines consult with counsel to explore available insurance coverage options.<\/p>\n","protected":false},"excerpt":{"rendered":"

David Delmar | The Policyholder Report | July 28, 2016 In a recent case, Oregon Shakespeare Festival Ass\u2019n v. Great American Ins. Co., the federal District Court for the District of Oregon adopted a liberal interpretation of \u201cproperty damage.\u201d The Oregon Shakespeare Festival Association (OSF) suffered a loss during its season: nearby wildfires caused smoke… Continue reading Oregon Federal Court Endorses Broad Definition of \u201cProperty Damage\u201d<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3,9721],"tags":[3,320,56],"class_list":["post-891043","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","category-property-damage","tag-insurance-claims","tag-oregon","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nOregon Federal Court Endorses Broad Definition of \u201cProperty Damage\u201d - 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