Opinion, please?

Ohio Subscriber

A

The liability coverage of the homeowners forms responds to property damage caused by an occurrence, which is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results during the policy period in 'bodily injury' or 'property damage'.”

The question thus is twofold: 1) was the loss caused by an occurrence, and 2) was the result property damage?

These questions have been addressed in court. In the case of Safeco Ins. Co. of America v. Andrews, 915 F.2d 500 (U.S. App. 1990) the California court simply stated that the insured's negligent misrepresentation was not an occurrence under the policy, and found for the insurer. The court did not further explain its reasoning. In Wood v. Safeco Ins. Co. of America, 980 S.W.2d 43 (Mo. App. Ct. 1998) the insured negligently represented that real property he sold was not susceptible to flooding. When the property flooded, he was sued for negligent misrepresentation. The Missouri court rejected the California case, and ruled the misrepresentation was an occurrence which resulted in property damage, of which the loss of use because of the flooding was a part.

However, the ISO special provisions for Missouri now add this exclusion: There is no coverage for “'bodily injury' or 'property damage' arising out of any written or oral statement made by you or others on your behalf which is material to any financial transaction.” That would appear to preclude coverage.

In your situation, the claimant sustained an economic loss. Therefore, it may be left for a court in your jurisdiction to determine coverage based on the facts.