No Reservations Available for HOA Insurers

The judges of the Fourth Circuit Court of Appeals affirmed a district court decision that two insurers who tried to reserve their rights to deny coverage actually failed to do so for inadequate reservation of rights letters. The case is called Stoneledge at Lake Keowee Owners’ Ass’n v. Cin. Ins. Co., 2022 U.S. App. LEXIS 34292 (4th Cir. 2022). Please note that this opinion is unpublished and may only be cited according to Rule 32.1 of the Federal Rules of Appellate Procedure. 

Stoneledge managed a group of townhomes, built in the early 2000s, on Lake Keowee in South Carolina. In 2009, Stoneledge sued the construction company that had built the homes and its managing member for alleged construction defects that led to water intrusion and other physical damage in the townhomes. Both the company and its managing member had CGL policies covering property damage: one from Builders Mutual Insurance Company effective from January 30, 2004 to October 20, 2007, and another from Cincinnati Insurance Company that covered April 1, 2008 to April 1, 2012.