## Facts

- Homeowners Michelle and Robert Russell discovered moisture and mold in their attic.
- The moisture and mold were attributed to faulty workmanship involving attic ventilation and insulation defects that allowed moisture to accumulate over time.
- The Russells vacated the home for an extended period during mold remediation and sought insurance benefits for mold damage and loss of use (additional living expenses).
- The homeowners policy excluded loss caused by “faulty, inadequate, or defective” workmanship or construction.
- The policy included an ensuing-loss clause generally preserving coverage for a later loss if a covered peril, distinct from an excluded peril, causes that later loss.
- The policy also included a mold endorsement providing limited mold coverage only under specified conditions and excluding certain losses tied to long-term moisture conditions (subject to narrow exceptions).
- NGM Insurance Company denied coverage, relying on the faulty-workmanship exclusion and the mold endorsement’s limitations.
- The Russells sued for declaratory relief; the trial court granted summary judgment for NGM, and the Russells appealed.

## Issues

1. Whether moisture and mold damage developing over time from faulty workmanship constituted a covered “ensuing loss” notwithstanding the faulty-workmanship exclusion and the mold endorsement’s restrictions.
2. Whether loss-of-use/additional living expense coverage applied when the underlying physical damage was not covered.

## Decision

- The Supreme Court of New Hampshire affirmed summary judgment for NGM.
- The court held the policy did not cover the mold and moisture damage under the exclusions and the mold endorsement.
- The court rejected the insureds’ claim that the mold damage was a covered ensuing loss.
- The court held loss-of-use/additional living expense coverage was not available absent a covered property loss.

## Legal Principles

- Insurance policies are construed as a whole and according to the plain meaning of their terms as understood by a reasonable insured.
- An ensuing-loss clause preserves coverage only when an excluded cause results in a subsequent loss caused by a separate, independent covered peril; it does not convert progressive damage that is the ordinary result of the excluded cause into covered loss.
- A specific endorsement addressing a particular risk (here, mold and long-term moisture conditions) controls and limits coverage for that risk, and general policy provisions cannot be used to negate the endorsement’s restrictions.
- Loss-of-use/additional living expense coverage depends on an underlying covered physical loss; if the property damage is excluded, loss-of-use coverage is not triggered.
- Contra proferentem applies only where policy language is materially ambiguous; clear exclusions and endorsements are enforced as written.

## Conclusion

The court held that attic mold and moisture damage attributable to faulty workmanship fell within the policy’s exclusions and the mold endorsement’s limitations, and that the ensuing-loss clause did not reinstate coverage because there was no distinct covered peril causing a separate subsequent loss; without a covered property loss, additional living expense coverage also failed.


Russell v. NGM Ins. Co., 176 A.3d 196 (N.H. 2017)