Twigg v. Admiral Ins. Co.

“Whether an insurance claim seeks recovery for an “accident” does not depend on a plaintiff’s pleading decisions in the underlying claim against the insured but depends instead on whether there is a basis in fact for imposing tort liability.” … Because the insured “breached a duty imposed by law, and not one solely arising from contract”, the property damage is covered under the insurer’s policy for indemnification.

Plaintiff had been awarded a judgment from an arbitrator on a breach of contract claim when a general contractor, the insured party, failed to repair a garage floor according to their agreement. Plaintiff sued the insurer, defendant Admiral Insurance Company, for failing to indemnify the insured’s damages owed. However, the defendant was awarded summary judgment, dismissing plaintiff's claim for coverage because the terms of the policy agreement only indemnified the insured contractor for property damage caused by an “occurrence”, defining occurrence as “an accident”; the policy did not cover insured’s breach of contract.

“Whether an insurance claim seeks recovery for an “accident” does not depend on a plaintiff’s pleading decisions in the underlying claim against the insured but depends instead on whether there is a basis in fact for imposing tort liability.” … Because the insured “breached a duty imposed by law, and not one solely arising from contract”, the property damage is covered under the insurer’s policy for indemnification.

The main issue was determining the definition of “accident” under the policy. Looking to other sources because “accident” was not defined in the contract, the Court reasoned that the term “accident” had two reasonable interpretations: plaintiff’s definition as an unintended mistake, and defendant’s definition also or injury leading to legal fault. Under the Hoffman framework, when two or more interpretations are reasonable, then the Court must assess the context of the term in the policy. Accident is defined within "occurrence", which has a broader definition. The choice to use “occurrence” implies the contract drafters intended to include actions beyond those filed under tortious legal proceedings. 

 The Court concluded that tort liability, or a tortious pleading, is not necessary under the definition of “accident”. Facts that support a breach of duty as a tort, regardless if there is also a breach of contract claim, are sufficient to satisfy the definition of “accident”, and warrant the insurer to indemnify the claim against the insured. Therefore, the Court ruled it was error to award defendant summary judgment because there was a factual dispute as to whether the insured breached a general duty of care, which determines if plaintiff’s claims for damages are covered by insurer’s commercial policy. REVERSED and REMANDED.