Homeowners Archives - Insurance Coverage Corner

In Georgia, Coverage for Lead Paint Exposure Excluded as Pollutant Under CGL Policy

March 31, 2016Melissa Baileymbailey@carlockcopeland.com

This month, the Georgia Supreme Court held that a CGL policy did not provide coverage for brain damage to a child as a result of exposure to lead paint in a rental home.

The suit arose out of a toddler suffering brain damage due to exposure to lead paint in a rental home. The home was insured by a CGL policy issued to the landlord, and the insurer filed a declaratory judgment action arguing that there was no coverage for the claim because bodily injuries due to exposure to pollutants were excluded. Summary judgment was granted to the insurer in the trial court, but the Court of Appeals reversed, holding that the policy did not specifically exclude lead paint as a pollutant. On certiorari, the Georgia Supreme Court reversed the Court of Appeals, agreeing with the trial court that the pollution exclusion barred coverage for the claim.

Specifically, the policy excluded coverage for “(1) ’bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured.” “Pollutant” was defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

Ruling for the insurer, the Supreme Court acknowledged that the question of whether lead paint was a pollutant was one of first impression in the State, but it held that prior cases excluding coverage for different pollutants (such as carbon monoxide) under policies with similarly broad language were controlling. In keeping with those cases, the Court held that “lead present in paint unambiguously qualifies as a pollutant” and “the plain language of the policy’s pollution exclusion thus excludes [the claim] from coverage.” Key in this ruling was the Court’s lengthy discussion of the history and purpose of pollution exclusions in CGL policies.

The case discussed herein is Georgia Farm Bureau Mut. Ins. Co. v. Smith, No. S15G1177 (Ga. March 21, 2016). Please contact us if you would like a copy of the case or have any questions.

Declaratory Judgment Action Filed in Northern District of California Raises Issues as to “Additional Insured” Claims Nationwide

October 29, 2015November 2, 2015Laura Patonlpaton@carlockcopeland.com

In an interesting Declaratory Judgment Action filed in the California, Travelers Insurance is arguing that Centex Homes does not have the right to independent counsel to fight a construction defects suit under their additional insured policy. Alternatively, should Centex refuse defense counsel selected by Travelers, Travelers’ duty to defend is extinguished.

On October 28, 2015, counsel for Travelers filed their DJ action captioned: Travelers Property Casualty Company of America v. Centex Homes et al in the Northern District of California. According to the Complaint, Travelers provided policies to Centex’s subcontractor Engeo, Inc. When the homeowner’s association of the condos at issue sent Centex a Notice of Commencement of Legal Proceedings alleging construction defects, Centex tendered that underlying action to Travelers under the Enego policies as an additional insured. Travelers apparently appointed defense counsel and agreed to defend Centex in the action however, Centex refused to accept Travelers’ s appointed counsel. Travelers argues now that this refusal ended Travelers duty to defend Centex. At the heart of the issue appears to be whether Travelers has a right to control the defense as outlined in the underlying policy with Enego and whether Centex has the right to appoint counsel of its own choosing.

Unlike California (which has codified an insured’s right to independent counsel), South Carolina courts have not accepted the Cumis doctrine. However, this will be an interesting case to follow for those carriers litigating in our state who have accepted a general contractor’s defense under an additional insured endorsement. Should the California courts look favorably on Travelers, that might bode well for a carrier’s ability to control the defense of the general contractor when that defense is being provided as an additional insured on a subcontractor’s policy.

Conscientious Tenants Aren’t “Real Estate Managers” Under Homeowner’s Policy

February 23, 2015March 3, 2015Melissa Baileymbailey@carlockcopeland.com

The Eleventh Circuit recently upheld a district court’s grant of summary judgment to an insurer in a coverage dispute regarding the death of a two year old child. In Moon v. Cincinnati Ins. Co., the homeowner’s policyholder leased the insured home to his son and daughter-in-law. Moon, 2015 WL 342330 (11th Cir. Jan. 27, 2015). The daughter-in-law was babysitting a neighborhood toddler, and, while under her care, the toddler drowned in the backyard swimming pool. The decedent’s parents subsequently filed sued against the son and daughter-in-law.

Initially, the insurer defended the suit under a reservation of rights; however, it later denied coverage and withdrew its defense. The basis for the denial was that the policy did not cover the son and daughter-in-law vis-à-vis their relationship with the father policyholder. In the tort action, a judgment was entered in excess of $10 million.

After the denial, suit was brought against the insurer alleging breach of contract and bad faith failure to settle claims, as well as punitive damages and attorneys’ fees. The basis for the claim was that the son and daughter-in-law were covered by the policy because they were acting as “real estate managers” on behalf of the policyholder. To support this claim, they proffered evidence that the tenants performed routine maintenance on the home. Because the term was undefined in the policy, the plaintiffs argued that showing that a person took care of property on behalf of the landowner was sufficient to qualify that person for coverage under the “real estate manager” term.

The district court disagreed with the plaintiffs, and the Eleventh Circuit affirmed. Specifically, the Court held that “[t]he industry term ‘real estate manager’ implicates real estate transactions rather than routine maintenance.” Under the definition proffered by plaintiffs, “it would transform every tenant, family member or friend living in another’s home, who cuts the yard or paints a wall, into a covered real estate manager. This is not a reasonable interpretation of real estate manager.”

Additionally, even if the term “real estate manager” did encompass tenants, no coverage would be afforded under these circumstances because the claims arose out of a babysitting job, not duties being performed in the role of a real estate manager.

This case reflects long-standing Georgia precedent that courts will not strain to find ambiguities that do not exist, even when a policy term is undefined.

Increased Liability for Dog Owners: Understanding Coverage for Dog Bite Injuries

June 27, 2014March 31, 2016Michael Ethridgemethridge@carlockcopeland.com

Dogs are staples in homes all across the country. They’re a man’s best friend; they grow up with your kids; and they become an integral part of the family unit. At the end of the day, however, dogs are animals and they can be unpredictable, at times. Dogs bite more than 4.5 million people every year in this country. (See Dog Bite Law, www.dogbitelaw.com). In fact, roughly 1,000 U.S. citizens require emergency care treatment each day for dog bite injuries. (See DogsBite.org, www.dogsbite.org). Dog bites have become so pervasive that the American Veterinary Medical Foundation (“AVMF”) holds National Dog Bite Prevention Week during the third full week of May each year.

In addition to becoming a health and safety concern, the increased prevalence of dog bites is also leading to increased liability for dog owners. Many homeowners probably do not even know if their homeowner’s insurance policy covers dog bite injuries. Moreover, due to the rising cost of medical expenses and inflated legal settlements, many insurance companies are excluding dog bite injuries from coverage, or only including them as a covered event for an added cost. Some insurance companies have gone as far as refusing to offer coverage for certain types of breeds with a reputation for aggressive behavior, including these eleven breeds: (1) Pit Bulls and Staffordshire Terriers; (2) Doberman Pinschers; (3) Rottweilers; (4) German Shepherds; (5) Chows; (6) Great Danes; (7) Presa Canarios; (8) Akitas; (9) Alaskan Malamutes; (10) Siberian Huskies; and (11) Wolf-hybrids. (See Catey Hill, 11 Riskiest Dog Breeds for Homeowners and Renters, Forbes (Mar. 30, 2012, 10:57 AM), http://www.forbes.com). If you choose to purchase one of these dogs and welcome them into your home, be forewarned that it may be difficult or even impossible to get insurance coverage to protect you against an unfortunate event. There are some carriers now—Xinsurance for example—that provide individuals with the ability to create custom personal liability policies that address areas traditional policies fail to cover, such as dog bites.

In Georgia, two essential elements must be proven in order to support an action for damages in connection with a dog bite—the animal must have a vicious or dangerous character, and knowledge of this propensity on the part of the owner must be demonstrated. See Levy v. McKay, 149 Ga. App. 251, 253 S.E.2d 872 (1979). Consequently, although insurance coverage for certain breeds may be unavailable, owners are protected by a plaintiff’s significant burden to sustain a cause of action.

If you own a dog or plan on purchasing a canine in the near future, examine closely your insurance policy to ensure that canine inflicted injuries are not excluded. And, to be on the safe side, engage your insurance agent to go over the policy with you so all relevant sections of the policy are reviewed in order to guarantee the proper analysis.

Motor Vehicle Exclusion in Homeowner’s Policy: Not Ambiguous and Given Broad Interpretation

March 7, 2012February 16, 2015Charles McDanielinfo@carlockcopeland.com

Hays v Georgia Farm Bureau Mut Ins Co picture of truck

The Georgia Court of Appeals recently confirmed that the term “use” in motor vehicle exclusions contained in homeowner’s policies is not ambiguous. In Hays v. Georgia Farm Bureau Mut. Ins. Co., the homeowner’s policy contained a typical motor vehicle exclusion that excluded coverage for bodily injury “arising out of the ownership, maintenance, use, loading or unloading or motor vehicles owned or operated by or rented or loaned to [the insured].”Id.

The homeowner’s friend was injured when the homeowner attempted to lift a portable toilet onto a deer stand on the homeowner’s property using a pulley system tied to the end of the homeowner’s truck. Id. When the homeowner pulled the truck forward in an attempt to lift the toilet onto the stand, the stand and the homeowner’s friend fell 20 feet to the ground. Id.

“Occasional” Within Homeowner’s Policy Unambiguous

February 10, 2012February 16, 2015Charles McDanielinfo@carlockcopeland.com

injured child In State Farm Fire & Cas. Co. v. Bauman, — S.E.2d –, 2012 WL 104514 (2012), the plaintiff’s daughter was injured while in the care of the insured. The insured provided after-school childcare services for the daughter most school days.Id. at *1. The insured did not provide childcare for the daughter during vacations, school holidays, or when the daughter was sick. Id.

The insured’s homeowner’s policy excluded liability and medical payments coverage for claims brought against the insured by “any person who is in the care of any insured because of child care services provided by or at the direction of any insured,” and “any person who makes a claim because of bodily injury to any person who is in the care of any insured because of child care services provided by or at the direction of any insured.” Id. at *2. By its express terms, the exclusion for child care services did not apply “to the occasional child care services provided by any insured.” Id.

The plaintiff obtained a judgment against the insured and sued the insurer directly. Id. at *1. The trial court denied the insurer’s motion for summary judgment, finding that the term “occasional” was ambiguous, creating a jury question as to whether the insured provided “occasional” child care services. Id. at *2. The insurer appealed and the Georgia Court of Appeals reversed, finding that the policy excluded coverage for the claims against the insured. Id. The court noted that

“a word or phrase is ambiguous only when it is of uncertain meaning, and may be fairly understood in more ways than one so that it involves a choice between two or more constructions of the contract.” Id.