Tidwell Enterprises, Inc. v. Financial Pacific Ins. Co., Inc.

CGL insurer owed its insured, a contractor, a duty of defense against claim that the insured’s mis-installation of a chimney caused a fire that destroyed the house; even though the fire occurred outside the policy period, the wood surrounding the chimney may have suffered progressive deterioration starting in the policy period and ultimately leading to the fire.  A CGL insurer owed a contractor a duty of defense in a suit brought against the contractor by the homeowner’s insurer that paid the homeowner to restore the home which was destroyed by a fire, allegedly started in the chimney area of the fireplace that the contractor had installed in the home.  Although the fire occurred after expiration of the CGL policy coverage period, it may have been only the ultimate result of a slow process of deterioration of the wood around the outside of the chimney flue.  A least one theory supported by expert testimony was that the contractor mis-installed the flue so that it overheated during normal use of the fireplace, in turn overheating and damaging the wood outside the flue through a process known as pyrolysis, which gradually lowered the wood’s ignition threshold to the point it ultimately burst into flames when the fireplace was used.  The damage through pyrolysis might have started during the CGL policy’s coverage period, and so the claim was covered even though the ultimate loss through fire occurred later.

California Court of Appeal, Third District (Robie, J.); November 29, 2016; 2016 WL 6962291


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