Air Master [Heating] & Cooling v. Selective Ins. Co. of Am., 2017 N.J. Super. LEXIS 144 (App. Div. 2017)

New Jersey recognizes and applies the continuous-trigger theory of insurance coverage to claims involving progressive damage to property caused by an insured’s allegedly defective construction work.

The “last-pull” of the continuous trigger for purposes of determining an “occurrence” happens when the “essential nature and scope of the property damage first becomes known, or when one would have sufficient reason to know of it.” The Appellate Division expressly rejected the notion that that the “last-pull” of the trigger does not occur until there is expert or other proof to implicate the insured’s faulty work.

In reaching this decision, the appellate court examined the New Jersey Supreme Court’s decision in Owens-Illinois, Inc. v. United Insurance Co., 138 N.J. 437, 454-456 (1994), in which it adopted the continuous-trigger theory for property damage insurance claims that arose from the installation of asbestos-related products. The appellate court indicated that, while instrumental for purposes of adopting the continuous-trigger test, the Owens-Illinois court “[d]eclined to articulate what exactly is the ‘end’ point or the ‘last pull’ of the coverage trigger, for purposes of a progressively-developing injury.” To address this issue, the appellate court turned to Winding Hills Condominium Association, Inc. v. North American Specialty Insurance Co., 332 N.J. Super. 85, 88-93 (App. Div. 2000), which offered that the end point, or “last pull,” be determined by the discovery or awareness of the “essential difficulties” or the “essential” nature of the harm.

Due to the Winding Hill panel’s failure to define “essential” manifestation, the appellate division in the instant matter held “[e]ssential [manifestation]… to connote the revelation of the inherent nature and scope of [the] injury… [o]n one end of the spectrum, manifestation cannot be merely tentative… [n]or must the manifestation be definitive or comprehensive… [t]he critical term ‘essential,’ as used in this coverage context, should be understood and applied with such concepts.”


Case Law Alerts, 1st Quarter, January 2018

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