{"id":891546,"date":"2017-01-11T11:32:18","date_gmt":"2017-01-11T18:32:18","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=891546"},"modified":"2017-01-11T11:32:18","modified_gmt":"2017-01-11T18:32:18","slug":"damages-injury-likely-occur-imminent-may-no-longer-trigger-insurance-coverage","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/damages-injury-likely-occur-imminent-may-no-longer-trigger-insurance-coverage\/","title":{"rendered":"Damages or Injury \u201cLikely to Occur\u201d or \u201cImminent\u201d May No Longer Trigger Insurance Coverage"},"content":{"rendered":"

Masaki J. Yamada | Ahlers & Cressman PLLC<\/a> | December 22, 2016<\/p>\n

Washington Courts allow an insurer to determine its duty to defend an insured against a lawsuit based only on the face of the complaint and the limitations of the insurance policy. \u00a0This is otherwise known as the \u201ceight corners\u201d rule (four corners of the complaint plus the four corners of the policy). \u00a0In other words, the insurance company is not permitted to rely on facts extrinsic to the complaint in order to deny its duty to defend an insured. \u00a0See Truck Ins. Exch. v. VanPort Homes, Inc.<\/i>, 147 Wn.2d 751, 763 (2002). \u00a0The laws in Washington provide greater protection to the insured over the insurer when it comes to the insurer\u2019s duty to defend.\u00a0 The duty to defend a claim is triggered if a claim could \u201cconceivably\u201d be covered under the policy. \u00a0See Woo v. Fireman\u2019s Insurance<\/i>, 161 Wn.2d 43 (2007). \u00a0If there is any ambiguity in a policy with regard to coverage, the ambiguity is interpreted in favor of the insured.<\/p>\n

As a result, contractors in Washington regularly tender claims or potential claims to their insurers even when damage has not occurred but will occur in the imminent future. \u00a0Especially in the context of construction defect cases, a contractor will tender such a claim to its insurer to trigger the broad duty of the insurer to provide a defense. \u00a0We also regularly recommend this to our contractor clients. \u00a0For example, if a building owner serves a contractor with a claim that the construction and installation of a window system will imminently cause leaks and corrosion, we would recommend that the contractor tender the claim to its commercial general liability insurer. \u00a0Washington courts have found a duty to defend when there are allegations in the complaint that covered damages will occur in the imminent future.<\/p>\n

A recent decision by a Washington Federal Court, however, suggests that not all claims for potential future harm trigger a duty to defend. \u00a0In Am. Mgmt. Servs. E. LLC v. Scottsdale Ins. Co.<\/i>, et al.<\/i>, 2016 WL 1558615, a declaratory judgment action filed by the insurer, the Court found that the insurers owed no duty to defend the insured, a property management company and its CEOs, for alleged \u201cfalsification of work orders\u201d despite the fact that they allegedly posed and continued to pose a direct risk to the life and safety of the residents of the housing project. \u00a0The Court found that such allegations do not constitute \u201cbodily injury\u201d or \u201cproperty damage\u201d under the CGL policies at issue. \u00a0The Court further stated that \u201c[l]ogic dictates that without an actual harm suffered, there cannot be any damages awarded because of \u201cbodily injury\u201d or \u201cproperty damage.\u201d<\/p>\n

The Court found that costs incurred to prevent future damage falls outside the definition of \u201cproperty damage\u201d under CGL policies. \u00a0The Court went on to state that the creation of a risk of harm, without any alleged physical injury to the properties, was insufficient to trigger defense coverage. \u00a0The insured attempted to argue that \u201cthe pleadings were sufficiently broad that there was \u2018the possibility that the underlying plaintiffs could introduce evidence of actual property damage and\/or bodily injury \u2026 in support of their claims.\u201d \u00a0The Court declined to accept this argument and reiterated the general rule in Washington that it is not enough to merely speculate that the underlying plaintiffs could, at some later time, allege actual injury or damage.<\/p>\n

The Court also used the rule that extrinsic evidence outside of the complaint cannot be used to determine coverage against the insureds, which is a rule commonly used against insurers who deny the insured coverage. \u00a0The Court determined that the allegations in the underlying complaint clearly did not allege an injury. \u00a0Specifically, the Court pointed out that the extrinsic evidence, submitted through employee affidavits, did not reference specific injury, but merely the possibility of future harm.<\/p>\n

Based on the Court\u2019s ruling in this case, insurers may be able to seek declaratory judgment on their duty to defend when there is no allegation that \u201cproperty damage\u201d or \u201cbodily injury\u201d has already occurred, but merely the possibility that such harm could occur or will occur in the imminent future. \u00a0This ruling is significant because despite the complaint pleading facts regarding imminent risk, the Court found the insurer had no duty to defend. \u00a0This case could make it more difficult for contractors and developers to tender claims for potential property damage or damage in the imminent future to their insurers. \u00a0While it is a federal case and not a Washington State case, this case would allow an insurer to immediately file a declaratory judgment action in Washington federal courts.<\/p>\n","protected":false},"excerpt":{"rendered":"

Masaki J. Yamada | Ahlers & Cressman PLLC | December 22, 2016 Washington Courts allow an insurer to determine its duty to defend an insured against a lawsuit based only on the face of the complaint and the limitations of the insurance policy. \u00a0This is otherwise known as the \u201ceight corners\u201d rule (four corners of… Continue reading Damages or Injury \u201cLikely to Occur\u201d or \u201cImminent\u201d May No Longer Trigger Insurance Coverage<\/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":[3,8782,9721],"tags":[57,23,361,56],"class_list":["post-891546","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","category-personal-injury","category-property-damage","tag-duty-to-defend-2","tag-insurance-coverage","tag-personal-injury","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nDamages or Injury \u201cLikely to Occur\u201d or \u201cImminent\u201d May No Longer Trigger Insurance Coverage - 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