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INSURANCE LAW: Homeowners policy held not to cover alleged misrepresentation in property disclosure statement

INSURANCE LAW: Homeowners Policy Held Not To Cover Alleged Misrepresentation In Property Disclosure Statement

In a declaratory judgment action, the homeowners insurer sought a declaration that it had no duty to defend its insured.  The insured had been named as a defendant in a lawsuit alleging that the insured represented on a property disclosure report that he lacked knowledge about basement water seepage, water damage, rot or driveway problems.  After the property was sold, the driveway was allegedly washed away by floods and it was alleged that water damage, mold and rotten beams were discovered.  The Superior Court finds that the alleged misrepresentations do not qualify as property damage under the terms of the insurance policy, and grants the insurer’s motion for summary judgment.

On appeal, the Appellate Court affirms.  “The damages claimed by the [buyers] as a result of the defendant’s alleged misrepresentations constituted economic or pecuniary losses, and not property damage within the ambit of the coverage of the policy.”

New London County Mutual Ins. Co. v. Sielski, AC 36792 (September 15, 2015)