NH Ct Says Ambiguous Exclusion Results in Coverage for Ass’n Claims

New Hampshire Supreme Court decision (January 13, 2015).

In this action a homeowners association that consisted of the owners of 24 residential condominium units filed an action for declaratory relief seeking a court determination that two insurance carriers that provided coverage to the developer of the project were responsible for the losses incurred by the association due to water damage allegedly caused by a defectively constructed  “weather barrier.”  The trial court granted the insurance carriers’ motions for summary judgment based on a finding that two exclusions in the subject policies were applicable and therefore, coverage for the association’s claims was excluded under the policies. The association filed an appeal.

In reviewing the trial court’s decision, the appellate court found that one of the two exclusions in question was subject to more than one reasonable interpretation, one of which would provide coverage. As such, that particular exclusion was ambiguous and, under the law, an ambiguity in an insurance policy must be construed against the insurer. Thus, the appellate court ruled that the trial court erred in finding that the ambiguous exclusion operated as a complete bar to coverage for the claims asserted by the association.  As a result, the case was remanded to the trial court for further proceedings to determine the extent of the damages that were suffered by the association which were not barred by the exclusion found to the ambiguous.

See case decision:  Cogswell_Farm_Condo._Ass’n_v