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Construction Law

: The South Carolina Construction Law Blog

When is Insurance Coverage Triggered in Construction Defects?

By Ryan McCabe

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An occurrence is an event unexpected or unanticipated from the standpoint of the insured. In terms of construction defects, it is also important to determine which insurance policy an occurrence triggers. Construction defects often do not manifest themselves for many years, thus the insurer may have changed several times over. Naturally, the insured wants to collect on all these policies in order to fully compensate his losses. The South Carolina Supreme Court has struggled over the issue of when coverage is triggered for many years.

Prior to 1997, the court utilized the manifestation theory, which triggered insurance coverage at the time the insurable issue was first discovered. In 1997, the Supreme Court handed down its decision in Joe Harden Builders v. Aetna Casualty & Surety Co., which changed the prevailing theory of coverage. In that case, a concrete company misaligned concrete columns in a building, which allowed water intrusion to occur causing serious damage to the building.

The court declined to adopt the manifestation theory, and instead went with a hybrid theory. This theory holds that coverage is triggered at the time of the injury in fact, and continuously triggers all policies from that point forward. Expert testimony is used to determine when, to a reasonable degree of professional certainty, the damage first occurred. This theory is pro-insured because it allows the insured to find more coverage than prior theories would have allowed.

This site and any information contained herein is for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Full post as published by The South Carolina Construction Law Blog on December 17, 2010 (boomark / email).