Construction defect cases are occurrence based matters which, in South Carolina, are pre-determined to involve the occurrence of property damage each and every year following a construction project. The “continuous trigger” theory puts the onus on a defense attorney to send notice in the form of a “tender letter” to all insurers affording CGL coverage to an insured for the time on risk.
Today we will look at this a little more closely.
South Carolina does not follow the “targeted tender doctrine”, which allows the insured to submit an entire claim to only one of multiple insurers whose policies may be triggered. However, South Carolina courts have held that when an insurer owes a duty to defend, the insurer must defend the entire claim. Sloan Constr. Co., Inc. v. Central Nat’l Ins. Co. of Omaha, 269 S.C. 183, 236 S.E.2d 818 (1977).
Where two companies insure the identical risk and both policies provide for furnishing the insured with a , neither company, absent a contractual relationship, can require contribution from the other for the expenses of the where one denies liability and refuses to defend. The duty to defend is personal to both insurers; neither is entitled to divide the duty. Indemnity contemplates merely the payment of money. The agreement to defend contemplates the rendering of services.Citing Sloan Constr. Co., Inc. v. Central Nat’l Ins. Co. of Omaha, 269 S.C. 183, 236 S.E.2d 818 (1977).
For purposes of indemnification, the claim must be submitted to each carrier on the risk while the damage continued, and each carrier is responsible for only the “property damage” that occurred during its policy period. Crossmann Cmties. of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40, 66-67, 717 S.E.2d 589, 603 (2011).
This distinction is often confusing at mediations, I have found. In certain situations we may have three policies of insurance defending a claim under three reservations of rights. Depending on the issues, any of the carriers might evaluate their indemnity duties as being slight and, in many cases, less than another carrier’s. As defense counsel it is important to make sure these issues are addressed by a third party, such as a good mediator. Fortunately we have several outstanding mediators in Charleston. William G. “Bill” Lyles, Jay Jones, and John Massalon come to mind.