On June 28, 2010, the California Court of Appeal published Pennsylvania General Insurance Company vs. American Safety Indemnity Company (2010), Cal. App. 4^th, a case involving the following recurring coverage issue in construction defect litigation that vexes primary and excess insurers alike: what, if any, obligation does an insurer owe to its policyholder where: (1) the commencement date of the damages is not certain, (2) the damages caused by the defective workmanship are continuous, and (3) the damages span the successive annual policies of one or more carriers? The short answer is it depends on the language of the insurance policy. But the Pennsylvania General case tells us more than that; it is a primer on the basic coverage issues arising from continuous damage claims.

While no new ground will be plowed for seasoned insurance coverage lawyers, it is hoped that some seeds of understanding will be planted for construction lawyers and other construction industry professionals. One aspect of the case is most interesting because the policy language at issue was a direct effort by the insurer to draft language that would avoid coverage in these kinds of continuous damage cases and thereby circumvent the holding in the seminal California Supreme Court case, Montrose Chemical Company v. Admiral Insurance Company.

via www.resolvingconstructiondisputes.com

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