Davis

In this appeal we address a homeowner’s insurance policy exclusion that precludes coverage for bodily injury or property damage arising out of the sale or transfer of real property, including known or unknown property defects. Read as a whole, this exclusion provides that after real property is sold or transferred, claims for bodily injury or property damage resulting from certain known or unknown defects in the real property are not covered. Thus, we conclude that this exclusion precluded coverage for claims brought against the insureds, sellers of certain real property, by the purchasers of the property and affirm the judgment in favor of the insurer because it had no duty to defend or indemnify the sellers in the underlying lawsuit.

FACTUAL AND PROCEDURAL BACKGROUND

In 1997, Cynthia and Daniel Davis purchased a course of construction policy from Fire Insurance Exchange (Fire) for a home they were building. After completion of the construction, the course of construction policy converted into a homeowner’s policy (the first policy). After living in the home for about nine months, the Davises sold it to Rick and Kristin Engebretsen in June 1998 and Fire cancelled the…