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Aetna Insurance Co. v. Aaron12/4/1996
d:
If you or another insured has a legal responsibility to pay a claim someone made based on bodily injury , personal injury , or property damage, resulting from an occurrence, we will pay that claim if it is covered under this policy.
(Emphasis in original).
The Court recognized that the insured's action was "intended to prevent the type of harm the policy would have covered", but the harm had been averted by the insured's preventive action. Schlosser, 325 Md. at 307. Nevertheless, because the policy only covered damages based on third-party loss, which had not occurred, the Court held that the policy did not cover the costs of prophylactic measures on the insured's property, undertaken to protect a third-party property owner from future harm. Id. at 306. In the absence of third-party property damage, the Court concluded that a general liability policy does not cover the cost of protective measures implemented by the insured to prevent future third-party property damage. The Court declined to "make a new contract under the guise of construction." Id. at 308 (quoting National Grange Mut. Ins. v. Pinkney, 284 Md. 694, 399 A.2d 877 (1979)).
Bausch & Lomb and Schlosser are factually distinct from the instant matter in critical respects. In contrast to those cases, third-party property was allegedly damaged due to a hazardous condition on Aaron's property. Moreover, in Schlosser, the precautionary measures of the insured were voluntarily undertaken. As we see it, if a court were to conclude that Aaron's property damaged the property of another, and that he was obligated to repair his own property in order to abate the nuisance, or to reimburse a third-party for the cost of repairs, the court's decision would constitute the functional equivalent of an agency directive.
IV.
We recognize that the liability portion of the Policy is not intended to provide first-party protection for damage to the insured's own property. That would be a misuse of the Policy. Thus, an insured may not recover under a liability policy for any portion of remediation expenses that apply only to the insured's property. To the extent that remediation expenses reflect the cost of repairs for damage to the insured's property, unrelated to preventative measures, they are not covered. If expenses are incurred by the insured to remedy existing damage to third-party property or to prevent further damage to that property, however, there may well be coverage.
Intel Corp., 952 F.2d at 1566, supports this view. There, the court noted that repair costs must be sorted into two categories: damage to third-party property and damage to the insured's property. Id. The court underscored that the insured was not entitled to recover costs incurred solely to remedy damage to its own property. To the contrary, coverage applied only to those costs incurred to remediate existing damage or to prevent further damage to third-party property. Id. Consequently, it was the responsibility of the trier of fact "to determine what expenditures were made solely to remedy damage to [the insured's] own property and which were undertaken on account of damage to the property of third parties." Id.
What the court said in United States v. Conservation Chem. Co., 653 F. Supp. 152, 200 (W.D. Mo. 1986), also provides guidance here:
Coverage of the abatement remedy on the [insured's property] designed to prevent damage or further damage to third parties cannot be denied on the basis of the owned property exclusion. This does not, however, include elements of the claim which relate to a remedy for damage confined to the [insured's property] itself. To the extent that all or
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