New Jersey Appellate Division Leaves the Door Open for Continuous Trigger in Construction Defect Cases

Over the past decade, courts across the country have delivered countless number of decisions on the scope of liability coverage for underlying construction defect claims. Most of these decisions focus on whether claims of faulty workmanship constitute an occurrence, and if so, whether the business risk exclusions apply to preclude coverage. Just as important, but often overlooked, is the issue of trigger.

Consider, for example, a scenario in which a homeowners' association files suit against a builder based on large-scale water intrusion problems throughout a 100-unit luxury home residential development. The homes are built in year one, leaks begin behind the walls in year two, the homeowners discover the leaks in year three when water finally penetrates the interior of the homes, and leaks occur in years four and five during unsuccessful remedial efforts. The homeowners file suit in year six. The builder tenders the suit to multiple insurers, all of which issued CGL