In Strauss v. Chubb Indemnity Insurance Company,1 the 7th Circuit Court of Appeals found a loss in Wisconsin that continued for sixteen years could proceed pursuant to the “continuous trigger theory” and was not time-barred.
The plaintiffs constructed a home in Wisconsin in 1994 and insured it with Chubb from 1994 to 2005, changing carriers in 2005. The policy stated that coverage is limited “only to occurrences that take place while this policy is in effect.” It also contained a clause that stated “Legal Action Against Us” must take place “within one year after a loss occurs.” In 2010, plaintiffs discovered a water infiltration had been causing damage, seemingly since the home was constructed. In December 2010, they submitted a claim to Chubb who denied coverage because,
- the damage was not discovered during the policy period;
- the claim was time-barred as the statute of limitation had run, and
- the “Legal Action Against Us” clause was violated.
Plaintiffs filed suit within one year of finding the damage. The court concluded that the “continuous trigger theory” applied such that coverage existed for the entire loss and that the claims were not time-barred.
For an insurance policy to provide coverage to an insured, a triggering event must occur during the policy’s period of enforcement.2 There are four theories to determine this: exposure, manifestation, continuous and injury-in-fact.3 Chubb argued that the manifestation trigger theory applied such that only the insurer at the time the loss is found can be held responsible. Plaintiffs argued that the continuous trigger theory applied such that all policies in effect from the time the loss began would owe coverage. The court looked to the language of the policy rather than rely on a general theory. The court applied the continuous trigger theory because the policy covered “all risk of physical loss to [the] house or other property covered under this part of [the policy], unless stated otherwise or an exclusion applies.” The policy applied “only to occurrences that take place while this policy is in effect.” Once such an occurrence takes place, the policy protects against “all risk of physical loss” to the home. The water infiltration was found to constitute a single occurrence under the policy with continual and recurring damage to the property with each rainfall.
Timeliness of the Suit
Chubb argued that the plaintiffs filed their suit too late, past a statutory deadline and/or a time limit imposed by the policy. Parties to an insurance contract are free to alter the length of a statute of limitations and the date that the limitation period begins to run.4 Rather than require claims to be filed within one year “after the inception of the loss,” the policy permitted claims to be filed “within one year after a loss occurs.” “After a loss occurs” is fundamentally different from “after the inception.” The court concluded that plaintiffs could bring their claim at any point until a year after the water infiltration damage stopped.
In Wisconsin, under the continuous trigger theory, a progressive loss “occurs continuously from exposure until manifestation.”5 Here, because the loss was ongoing and occurred with each rainfall and because the policy itself stated that “[c]ontinuous or repeated exposure to substantially the same general conditions unless excluded is considered to be one occurrence,” the loss, for purposes of the statute of limitations, occurred all the way until the damage manifested in October 2010. Therefore, suit was timely.
1 Strauss v. Chubb Indemnity Ins. Co., 771 F.3d 1026 (7th Cir., Nov. 18, 2014).
2 Society Ins. v. Town of Franklin, 607 N.W.2d 342, 345–46 (Wis.Ct.App. 2000).
3 The “exposure” theory fixes the date of injury as the date on which the injury-producing agent first contacted the body or the date on which pollution began. The “manifestation” theory holds that the compensable injury does not occur until it manifests itself in the form of a diagnosable disease or ascertainable property damage. The “continuous trigger” theory, also known as the “triple trigger” theory, provides that the injury occurs continuously from exposure until manifestation. Finally, the “injury-in-fact” theory allows the finder of fact to place the injury at any point in time that the effects of exposure resulted in actual and compensable injury.
4 See Keiting v. Skauge, 198 Wis.2d 887, 543 N.W.2d 565, 567 (Wis.Ct.App.1995) (“Public policy in this state permits parties to bind themselves by contract to a shorter period of limitation than that provided for by statute.”)
5 Town of Franklin, 607 N.W.2d at 346.