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Vol. 7, Iss. 3
April 11, 2018


The Continuous Trigger Has A Limit

We all know how the continuous trigger came to be and how it operates to potentially expand the number of policies that may be obligated to provide coverage. While the continuous trigger had its genesis in the context of asbestos and hazardous waste claims, for so-called “latent injuries,” the concept also forever altered the general mindset of insurance coverage analysis. Attempts to treat all kinds of claims -- even for non-latent injury – as “continuous” is now de rigueur. Policyholders these days take an “All the world’s a stage for the continuous trigger” approach to coverage whenever possible.

But despite policyholders’ best efforts, the continuous trigger has its limits, as demonstrated by Exel Direct v. Nautilus Ins. Co., No. 16-446 (S.D. Ohio Mar. 30, 2018). The facts here are very simple. In July 2006 a Sears dryer was installed in a customer’s home by a subcontractor of Exel Direct. The installation was incorrect and lead to lint accumulation. In 2014 the dryer caught fire and burned down the customer’s home as well as neighboring properties. State Farm insured the lost homes and brought a subrogation action against Exel Direct. Exel Direct sought coverage from Nautilus, which issued policies to it from 2004 to 2008.

The Nautilus commercial general liability policies provided coverage for “property damage” during the policy period. The fire took place in 2014. The last Nautilus policy was off the risk in 2008.

You can see where this is going….

Enter stage left -- the continuous trigger. Exel Direct argued that “the ‘property damage’ at issue is not the fire itself, but instead the improper installation of the dryer: ‘It is alleged that the contractor improperly installed the dryer and its venting, causing a gap that compromised the integrity, function and use of the dryer. From the installation forward, allegedly accumulating lint degraded the dryers function, and a fire ultimately resulted on April 30, 2014.”

While the court acknowledged that Ohio law recognized the concept of a continuous trigger, it concluded that it was not applicable to the claim at issue. In continuous trigger cases, the injury occurs during more than one policy period. But that was not the case here. The court explained: “[T]he damage to the dryer itself [the error in installing the dryer that led to an accumulation of lint] may have occurred continuously, including during the policy period, but the injuries that the homeowners alleged in the underlying case occurred in one fell swoop, well outside the policy period. Because the injuries alleged in the underlying cases did not occur during the policy period, they do not qualify as covered property damage under the policy, and Nautilus does not owe Exel a duty to defend or indemnify as a matter of law.”

Despite its conclusion, the court did not discount the possibility of the claim having implicated the continuous trigger: “[H]ad the underlying complaints asserted damage to the dryer, Nautilus may have been obligated to defend and indemnify as to the impairment of the dryer.”

“All the world’s a stage for the continuous trigger.”

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