Section 4.59 Coverage E—Personal Liability

• Library: Insurance Practice 2015

“If a claim is made or a suit is brought against an ‘insured’ for damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence’ to which . . . coverage applies,” copyright, ISO Properties, Inc., 1999, the insurance company will pay up to policy limits the damages for which the insured is legally liable (including prejudgment interest awarded against an insured) and provide a defense by counsel of the company’s choice, even if the suit is groundless, false, or fraudulent.

“Occurrence” is defined as “an accident . . . which results, during the policy period, in . . . ‘[b]odily injury’; or ‘[p]roperty damage.’” Copyright, ISO Properties, Inc., 1999. When a liability policy defines “occurrence” as meaning “accident,” an “occurrence” means injury caused by the negligence of the insured. Wood v. Safeco Ins. Co. of Am., 980 S.W.2d 43, 49 (Mo. App. E.D. 1998). Negligent misrepresentation can be an “accident,” and thus, an “occurrence” covered by liability insurance. Id. at 52; see also Lampert v. State Farm Fire & Cas. Co., 85 S.W.3d 90, 93 (Mo. App. E.D. 2002).

A subdivision trustee’s refusal to permit landowners to construct a hockey rink on their property within the subdivision was not an “occurrence” within the meaning of the trustee’s homeowners insurance policy covering liability for bodily injury or property damage caused by an occurrence. McDonough v. Liberty Mut. Ins. Co., 921 S.W.2d 90, 94 (Mo. App. E.D. 1996), appeal after remand, 968 S.W.2d 771 (Mo. App. E.D. 1997). The Supreme Court later ruled that the court in McDonough was incorrect when it stated that “damages” is limited to pecuniary compensation and does not include equitable relief. See Farmland Indus., Inc. v. Republic Ins. Co., 941 S.W.2d 505, 509 (Mo. banc 1997).

On the other hand, when buyers relied to their economic detriment on the seller/insured’s negligent misrepresentations regarding structural flaws in the house, intangible losses that occurred were not “property damage” within the meaning of the insurance policies. St. Paul Fire & Marine Ins. Co. v. Lippincott, 287 F.3d 703, 706 (8^th Cir. 2002). According to the court, although the structural flaws in the house constituted tangible property damage, the flaws predated the occurrence of the concealments and misrepresentations by which the insureds incurred liability. Id.

The general rule in Missouri is that the occurrence of an event in an indemnity policy is not the time when the wrongful act is committed but is the time when the complaining party is actually damaged. See Kirchner v. Hartford Accident & Indem. Co., 440 S.W.2d 751, 756 (Mo. App. W.D. 1969); see also Nationwide Ins. Co. v. Cent. Mo. Elec. Coop., Inc., 278 F.3d 742, 746 (8^th Cir. 2001). For an event to be a covered occurrence, the date when actual damage is first incurred must be within the effective dates of the indemnity policy. Am. Family Mut. Ins. Co. v. McMullin, 869 S.W.2d 862, 864 (Mo. App. E.D...