New Hampshire “property damage” and “occurrence”

In Concord Gen. Mut. Ins. Co. v. Green & Co. Building & Development Corp. , No. 2009-699 (N.H. Sept. 17, 2010), insured Green was the developer and general contractor for a residential development.  Green subcontracted with Birch for construction of the chimneys.  After completion and sale of the homes, several owners sued Green seeks damages for the repair of defective chimneys resulting in carbon monoxide leaking into the homes.   Green’s CGL insurer, Concord, defended the suits under a reservation of rights and filed a declaratory judgment action.  Green resolved the underlying suits by either repairing the defective chimneys or reimbursing those homeowners who had repaired their chimney.  In the declaratory judgment action, the trial court granted Concord’s motion for summary judgment, finding no “occurrence”.  On appeal, the Supreme Court of New Hampshire affirmed.   As to “property damage” the court held that, because the leaking carbon monoxide did not cause any physical, tangible alteration to any property, it did not constitute physical injury to tangible property “property damage.” As to “occurrence,” the court held that, because the defective chimneys did not result in either physical injury to tangible property other than the chimneys, or the loss of use of property other than the chimneys, there was no “occurrence.” The court specifically noted that no homeowner suffered bodily injury, or loss the use of or the ability to heat their house.  The court rejected Green’s argument that the costs to repair the chimneys should be covered because it prevented bodily injury, stating that a preventative repair does not constitute an “occurrence.”

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