Travelers Insurance v. Eljer Manufacturing, Inc.
757 N.E.2d 481 | Illinois Supreme Court | 2001
What This Case Means for Subcontractors
Travelers Insurance sued to avoid covering property damage claims against Eljer Manufacturing for defective plumbing systems. The Illinois Supreme Court ruled that insurance coverage is triggered when actual property damage occurs—like a leak causing home value to drop—not just when the defective product is installed. This matters because it means your insurance may cover damage claims even if the defect existed during installation, as long as the actual damage happened during the policy period.
Key Takeaways
- •Insurance coverage for defective products is triggered by actual damage occurring, not by installation or discovery of the defect
- •Property damage includes loss of home value that exceeds the cost of the defective component itself
- •Document when damage actually occurs, not when the defect was created or found, to support insurance claims
- •Keep detailed records of when leaks, failures, or other damage events happen during policy periods
Property damage includes diminution in value exceeding the defective component's value.
Frequently Asked Question
When does my insurance actually have to pay for property damage from a defective product I installed?
Insurance pays when actual damage occurs during the policy period, not when you install the product or when someone discovers it's defective. If a defective plumbing system causes a leak and reduces home value during your policy period, that's when coverage is triggered. Make sure you document exactly when the damage happened, not when the defect was found.
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