Zurn Engineers v. Eagle Star Insurance

The case at bench involves the bar of the statute of limitations of Insurance Code section 2071 requiring that an action on a fire or all risk policy of insurance be commenced within 12 months of the “inception of the loss.” In particular, action of the trial court granting an insurer’s motion for summary judgment must be tested by the meaning of the quoted phrase in the context of an all risk policy issued in “A.L.S. Contractor’s Installation or Builder’s Risk Form” where: (1) the policy specifically excludes from its coverage “loss or damage . . . caused by fault, defect, error or omission in design, plan or specifications”; (2) imposes a condition precedent to the insurer’s liability requiring a verified proof of loss stating its cause; and (3) the insured reasonably maintained that damage to property for which it was responsible in the course of performance of a construction contract was due to a design deficiency, the loss from which was the responsibility of the third party, a public entity contracting for the construction, rather than due to a nonexcluded cause, and that contention was not disclaimed by the public entity.

We conclude that where the statute of…