Insurers can sue each other, court says

Travelers was given the go ahead to sue Netherlands Insurance Co. in an $18mn lawsuit over a construction defect.

Insurance News


The Connecticut Supreme Court upheld a trial court’s decision that allows Travelers Casualty and Surety Co. of America to declare suit against a peer insurer's duty to defend in an $18 million lawsuit over damages suffered at the Connecticut School of Law library.
The library, erected in the 1990s, had several construction defects that caused severe water leakage and subsequent building damage.  The state subsequently filed a lawsuit against the builders, Lombardo Brothers Mason Contractors, Inc., as well as others, to recover the costs needed to repair the library.
Travelers, who insured Lombardo from 1994-1998, agreed to participate in the defense, and expended nearly $500,000 in the time leading up to the trial.  Netherlands Insurance Co., who covered Lombardo from 200-2006, claimed that they had no obligation to defend the contractors.
 Connecticut’s top court sided with Travelers, arguing that damages did occur during the time period of Netherlands’ coverage.
 “Although the construction of the law library was completed in 1996, the problems began in the ‘months and years’ that followed the state’s occupancy on 1996, and the ‘water intrusion proved to be continuing and progressive’ into the 200s, when the ‘state retained forensic engineers to investigate the full extent and likely causes of the problem,” ruled the court.
“Thus, the property damage alleged in the underlying complaint – however broadly worded – extended into Netherlands’ policy periods.”
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