Negligent Misrepresentation Claim not Necessarily Excluded from Homeowner’s General Liability Coverage if Insured did not Expect or Intend Injury
After a buyer bought a house from an insured seller, the buyer brought suit against the seller for rescission of the sales contract because the seller allegedly misrepresented the extent of a leakage problem in the house. The seller was insured by a family liability policy and asked its insurer to provide a defense in the underlying suit, which the insurer denied. The main issue was whether the insurer owed the seller a duty to defend based on the underlying claim of negligent misrepresentation.
The court held that a claim based on negligent misrepresentation, like all other claims based on negligence, is not necessarily excluded from coverage under a homeowner’s general liability policy, as long as the insured did not expect or intend the injury. Because the water infiltration, flooding, and mold growth was an occurrence that resulted in damage to the real and personal property of the buyers, and because the original complaint did not allege that the sellers intended the injuries, the suit was covered by the insurance policy.
USAA Casualty Ins. Co. v. McInerney, 2011 WL 5301619, —N.E.2d —- (Ill.App. 2 Dist., 2011).
