Gardens Condo. v. Farmers Ins. Exch., 544 P.3d 499

The Gardens Condominium sought insurance coverage for water damage to its roof, which resulted from condensation caused by faulty design and construction that limited ventilation.
The insurance policy at issue was an all-risk policy issued by Farmers Insurance Exchange, in effect from 2002-2004, with a faulty workmanship exclusion but a resulting loss exception.
Farmers denied the claim, arguing that the loss was excluded because it arose from a sequence of events initiated by faulty workmanship.
Gardens filed for declaratory judgment, arguing the resulting loss exception preserved coverage for damage caused by condensation and vapor, which were otherwise covered perils.
The trial court ruled for Farmers on summary judgment, but the Court of Appeals reversed, holding the resulting loss exception revived coverage. The Supreme Court granted review.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the resulting loss exception preserves coverage when	Resulting loss exception covers damage from covered perils, even if arising from	Only applies if covered event breaks the chain or if damage to	Yes; exception revives coverage for damage from covered perils resulting from faulty workmanship, regardless of chain or independence.
faulty workmanship starts the causal chain.	faulty workmanship; policy covers condensation and vapor damage to sheathing/joists.	other property occurs; excludes losses naturally following faulty work.
Whether the resulting loss must be a new, independent peril.	No requirement that the covered peril be independent from the excluded peril.	Covered peril must be independent or unexpected, not the natural result.	No independence required; coverage restored if a covered peril causes new, ensuing loss beyond defective work itself.
Whether policy exclusions bar coverage for water damage here.	Policy’s exclusions do not clearly bar coverage for condensation and humidity when	Exclusion overrides resulting loss exception due to "sequence of events"	Exclusion does not swallow resulting loss clause; exclusion strictly construed against insurer; coverage may be preserved.
	a resulting loss exception is present.	causation language.

Vision One, LLC v. Philadelphia Indem. Ins. Co., 174 Wn.2d 501 (resulting loss exception in all-risk policy can restore coverage for loss caused by a covered peril, even if initiated by an excluded peril)
Sprague v. Safeco Ins. Co. of Am., 174 Wn.2d 524 (ensuing loss requires damage beyond defectively constructed element and coverage depends on whether new and distinct peril occurs)
McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724 (resulting loss clauses carve out exceptions to policy exclusions)