Twigg v. Admiral Ins. Co.

“In order for the duty to indemnify to arise, the insured must be liable for harm or injury that is covered by the policy.” Ledford v. Gutoski, 319 Or 397, 405 (1994). The Supreme Court has held, "there can be no ‘accident,’ within the meaning of [an insurance] policy, when the resulting damage is merely a breach of contract.” Oak Crest Const. Co. v. Austin Mutual Ins. Co., 329 Or 620, 626 (2000).

The Twiggs appealed a judgment dismissing their claim against Admiral Insurance Company (Admiral) for breach of an insurance policy. The Twiggs assigned error to the trial court's grant of Admiral's motion for summary judgment, arguing that Admiral had a duty to provide coverage for damage to their home caused by negligent work performed by its insured because the policy's definition of "occurrence" could be understood to cover damage caused by mistakes. Admiral responded, contending that their insured's liability arose solely from breach of a repair agreement reached in previous arbitration proceedings; therefore, they had no duty to indemnify. “In order for the duty to indemnify to arise, the insured must be liable for harm or injury that is covered by the policy.” Ledford v. Gutoski, 319 Or 397, 405 (1994). The Supreme Court has held, "there can be no ‘accident,’ within the meaning of [an insurance] policy, when the resulting damage is merely a breach of contract.” Oak Crest Const. Co. v. Austin Mutual Ins. Co., 329 Or 620, 626 (2000). The Court found that "property damage" was understood to cover "physical injury to tangible property" caused by an "occurrence," which was "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." As such, the Court reasoned that a contractor's negligence certainly could give rise to an occurrence; however, here, the Twiggs had previously brought a claim for breach of contract, and the insured's liability for damages arose solely from a breach of the arbitration agreement. The damages were not covered under the policy. Affirmed.