Article Date: 08/30/2013

New Insurance Case: State High Court Rules that Commercial General Liability Policy Covers Construction Defects

By Scott Turner


Earlier this summer, a state high court joined a growing national trend by holding that defective completed construction work can be covered under commercial general liability (CGL) policies as an “occurrence” that causes “property damage” and can avoid the Your Work Exclusion, where the damage is to the work of the policyholder’s subcontractor. The court also rejected the common insurance company arguments that a CGL policy is not a performance bond and that such a policy only covers tort claims, never contract claims.


The ConstructionPro Week summary of this case is available to ConstructionPro Network members and includes:

  • The citation for the case
  • The details of the case
  • Author’s commentary
  • A link to the complete PDF copy of the original opinion

Here is a portion of the author's commentary:


"In holding that defects and deficiencies -- such as building code violations, defective construction, and poor quality control -- do not constitute 'property damage' unless they result in damage to other, non-defective property, the court obviously was thinking of the sort of construction defects that are fully defective from the time of construction. This fails to consider that construction work can be fine in the beginning but physically deteriorate after completion. That is obviously a 'physical injury to tangible property,' too."



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