It is well-established that in order to trigger coverage under an insurance policy, “the accident or injury must occur during the time period of coverage; or stated otherwise, no liability exists if the accident or injury occurs outside the time period of coverage of a liability policy.”1 Nonetheless, the appropriate trigger of coverage in construction defect cases remains unresolved and a hotly contested issue in Florida.
There are four triggers of coverage theories that are generally accepted: (1) exposure; (2) manifestation; (3) continuous trigger; and (4) injury-in-fact.2 Under the exposure theory, property damage occurs upon installation of the defective product.3 Under the manifestation theory, property damage occurs at the time damage manifests itself or is discovered.4 The continuous trigger approach defines property damage as occurring continuously from time of installation until the time of discovery.5 Finally, under the injury-in-fact trigger, which is also referred to as damage-in-fact, coverage is triggered when the property damage underlying the claim actually occurs.6
The appropriate trigger of coverage continues to plague practitioners in Florida due to the broad sweeping statements made by courts when examining this issue. In Travelers Ins. Co. v. C. J. Gayfer’s & Co., Inc, Travelers issued a policy of liability insurance to a plumbing contractor.7While the policy was in effect, the contractor installed a roof drainage system in the attic of Gayfer’s Pensacola store.8 After the policy expired, a joint in the drainage system failed, discharging rain water into the store.9 Gayfer’s filed suit against the contractor under various theories of negligence and implied warranty to recover for property damaged by the leak and for loss of use of undamaged property left idle when the store was closed for a day following the drainage system failure. Gayfer’s argued, among other things, that the definition of “property damage” was ambiguous since it may be fairly read as extending coverage “when the causative negligence occurs within the policy period though that negligence is not manifest until damage occurs beyond the policy period.”10
The apellate court disagreed with the injured’s argument and stated:
The phrase’ caused by an occurrence’ informs the insured that’ an identifiable event other than the causative negligence must take place during the policy period.’ The term’occurrence’ is commonly understood to mean the event in which negligence manifests itself in property damage or bodily injury, and it is used in that sense here.11
The curious use of the word, “manifests” has led many, including some of the courts cited below, to hold that Florida is a manifestation state.
In American Motorists Ins. Co. v. Southern Sec. Life Ins. Co., a United States District Court in Alabama interpreting Florida law, held that Florida courts follow the general rule that the time of occurrence, within the meaning of an indemnity policy, is the time at which the plaintiff’s injury first manifests.12 This case involved bodily injury and not property damage.13
In 2002, the case of Auto Owners Ins. Co. v. Travelers Cas. & Surety Co., a federal court interpreting Florida law held that the “trigger” of coverage for commercial general liability policies is “when the damage occurs and if damage is continuously occurring, the ‘trigger’ is the time the damage ‘manifests’ itself or is discovered.”14 In 2006, another federal court in the middle district ratified the opinion of its sister court in Essex Builders Group, Inc. v. Amerisure Ins. Co.15
By contrast, the case of Trizec Properties, Inc. v. Biltmore Construction Co., a federal appellate court held the potential for coverage is triggered “when an ‘occurrence’ results in ‘property damage.’”16 Significantly, the court stated, “there is no requirement that the damages ‘manifest’ during the policy period. Rather, it is the damage itself which must occur during the policy period for coverage to be effective.”17 In Trizec, the insured was subcontracted to install a roof deck on a shopping mall.18 The plaintiff sought damages for faulty workmanship. The complaint alleged the mall was constructed “commencing on or about 1971 and ending in or about 1975.”19 The complaint did not allege when the consequential effects of the improper installation actually began to occur.20 It did allege that the defects “involve latent defects” which were not discovered by plaintiff until their “manifestation” in 1979.21 Finding the insurer had a duty to defend, the court stated:
The potential for coverage is triggered when an “occurrence” results in “property damage.” There is no requirement that the damages “manifest” themselves during the policy period. Rather, it is the damage itself which must occur during the policy period for coverage to be effective. Here, the actual date that the damage occurred is not expressly alleged, but the language of the complaint, “at least marginally and by reasonable implication,” could be construed to allege that the damage (cracking and leaking of roof deck with resultant rusting) may have begun to occur immediately after installation, 1971 to 1975, and continued gradually thereafter over a period of time. The complaint’s allegations are therefore broad enough to allow the insured to prove that at least some of the damage occurred during insurer’s policy period, 1972 to 1976.22
Arguably, Trizec stands for the proposition that Florida is an injury-in-fact state since the court stated the damage itself must occur during the policy period. Pursuant to injury-in-fact trigger, coverage is triggered when the property damage underlying the claim actually occurs.23 Others argue that since the court found that there was a potential for coverage because the damage could have occurred from the time of installation and continued gradually over time, Trizec makes the trigger of coverage, a continuous trigger. The continuous trigger approach defines property damage as occurring continuously from time of installation until the time of discovery.24 It should be noted that the court did not use the time of discovery, 1979, as the cut-off point in reaching its decision.25 Accordingly, it can be argued that Trizec does not stand for the proposition that the trigger of coverage is a continuous one. Regardless of whether Trizec holds the trigger of coverage is “injury-in-fact” or adopts the continuous trigger approach, it is clear, contrary to the court’s holding in Auto Owners, supra, Trizec does not hold that the trigger of coverage is manifestation.26
In conclusion, no Florida appellate court has recently addressed the issue as to which trigger of coverage theory applies in Florida. However, a federal court interpreting Florida law has determined that manifestation is the trigger of coverage where the damage is continuous, as in construction defect cases. Furthermore, at least one circuit court judge in Miami-Dade County has held that manifestation is the trigger of coverage.27 This decision is currently on appeal at the Third District Court of Appeal. Until this case is resolved, and the trigger of coverage issue is specifically addressed, the trigger of coverage issue in Florida remains unsettled.
1 New Amsterdam Casualty Co. v. Addison, 169 So. 2d 877, 886 (Fla. 2d DCA 1964).
2 In re Celotex Corp., 196 B.R. 973, 1000, fn. 187 (Bkrtcy.M.D.Fla.1996)
7 Travelers Ins. Co. v. C. J. Gayfer’s & Co., Inc, 366 So. 2d 1199 (Fla. 1st DCA 1979).
11 Id. at 1979
12 American Motorists Ins. Co. v. Southern Sec. Life Ins. Co, 80 F.Supp.2d 280 (M.D. Ala. 2000).
14 Auto Owners Ins. Co. v. Travelers Cas. & Surety Co., 227 F.Supp. 2d 1248, 1266 (M.D.Fla.2002).
15 Essex Builders Group, Inc. v. Amerisure Ins. Co., 485 F.Supp. 2d 1302, 1309 (M.D. Fla. 2006).
16 Trizec Properties, Inc. v. Biltmore Const. Co., 767 F.2d 810, 813 (11th Cir. 1985).
18 Id. at 811.
22 Id.at 813.
23 In re Celotex Corp., 196 B.R. 973, 1000, fn. 187 (Bkrtcy.M.D.Fla.1996)
25 Trizec, 767 F.2d at 813
27 Master Plaster, Inc. v. Scottsdale Insurance et al., Case No. 08-26260 CA 40.
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