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The First Circuit recently confirmed the traditional rule that
it doesn't take much to trigger an insurer's duty to defend
a policyholder against an environmental claim. In Travelers Casualty and Surety Company v.
Providence Washington Insurance Company, the First Circuit
overturned the trial court's conclusion that there could be no
coverage for contamination under liability policies issued after a
property owner had ceased the activities giving rise to that
contamination.
As the appellate court noted, Rhode Island's trigger of
coverage rule is based on manifestation of property damage
– that is, when the property damage manifests itself or
is otherwise discoverable in the reasonable exercise of diligence.
Using that standard, the court looked at the policy's
occurrence language and applied it against the allegations in the
complaint to decide if there was a duty to defend. Significantly,
the complaint contained no specific allegations indicating
when the property damage had manifested itself or was
discoverable. According to the First Circuit, the vagueness of
the complaint's allegations must be construed against
the insurer such that an insurer can evade its duty to defend
"only where the pertinent charging document plainly shows no
potential for coverage."
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