Construction Defect Claims as Occurrences

Abstract

This article examines the law regarding coverage of faulty construction claims made by owners and others against contractors under the Commercial General Liability (CGL) policy. This article explains the meaning of occurrence, accident, property damage and business risk exclusions, as interpreted by the courts. The insured can guard against the high percentage of risk but he cannot guard against risk itself. The purpose of this article is to provide guidance and an advance starting point for practitioners on construction claims. Coverage is examined in the context of claims against contractors for their own negligent work and that of their subcontractors. If the contractor's work is pure negligence (substandard performance) and nothing more the claims will not be covered by the contractor's liability policy. An insurance contract is not a performance bond or any type of construction malpractice contract.

Keywords: CGL Policy, Construction Defect Claims, Occurrence, Accident, Property Damage, Exclusions