Date Damage is Discovered Irrelevant in Duty to Defend Case

Three years after Gilbert Gonzalez installed siding on Norman Hamilton’s house the house was damaged in a fire. Hamilton and his insurance provider alleged the fire resulted because Gonzalez hammered nails through an electrical wire during the course of his work. Gonzalez’s commercial general liability policy at the time underwritten by Mid-Continent refused to defend or indemnify Gonzalez. Gonzalez sued Mid-Continent. The district court issued a partial final judgment in Gonzalez’s favor. Mid-Continent appealed. The Fifth Circuit Court of Appeals reviewed the case based on the eight-corners rule. The Court found the damage to the property occurred when Gonzalez’s nail allegedly pierced the electrical wiring, although the damage wasn’t discovered until three years later. This puts the occurrence squarely in the timeframe of the CGL’s coverage. The Court also determined while Gonzalez was hired to install siding he was not hired to work on the house’s electrical system thus the insurance policy’s exclusion against damage to the “particular part” of the property on which Gonzalez worked does not apply. Mid-Continent, therefore, does have a duty to defend Gonzalez. Read more.