A recent 8th Circuit Court of Appeals case, applying Missouri law, reminds us that shoddy workmanship may not be covered by your commercial general liability insurance. This also means that if an owner claims your faulty workmanship caused problems on the project, you may have to pay those damages out of your own pocket, not the insurers. In this case, American Family Mutual Insurance Co., S.I. v. Mid-American Grain Distributors, [...]
We get a lot of calls from contractors asking about whether they have coverage under their Commercial General Liability insurance for a construction defect claim. The short answer is always--Maybe. An assessment of the claim requires a review of your policy and, equally important, which state’s law will interpret the claim. The first question, and often times only question, to be answered is whether the damage caused by the construction [...]
The debate of whether construction defects are covered by commercial general liability (“CGL”) insurance continues. The West Virginia Supreme Court recently reversed its longstanding position that construction defects were not covered by CGL insurance and joins the growing majority of state courts that have determined that defective work is covered by commercial general liability insurance. In West Virginia’s recent case, Cherrington v. Erie Insurance Property & Casualty Co., Ms. Cherrington [...]
A Commercial General Liability (CGL) insurer does not typically have liability for property damage to the structure being constructed. Instead, coverage usually only applies to other property damaged by the work. In the recent lawsuit Lagestee-Mulder, Inc. v. Consolidated Insurance Co., the contractor found out the hard way that he had no coverage when the owner sued for construction defects. In this case, the general contractor was named as an [...]
You may be seeing a rise in owners and contractors demanding the use of wrap-up insurance programs on projects. While wrap-ups may allow for some cost savings, you still need to maintain your base coverage and make sure completed operations coverage is in place. What are Wrap-Ups? Wrap-ups are blanket insurance programs that cover an entire project. They generally come in two forms: owner-controlled or contractor-controlled. Wrap-ups historically combine liability [...]
Most construction contracts require that the subcontractor list the general contractor as an additional insured. But, from a practical and coverage standpoint, what does that mean? When a general contractor is listed as an additional insured, the subcontractors insurance carrier owes the general contractor a duty of indemnity and defense for any vicarious liability the general contractor may incur as a result of the subcontractor’s negligence. The subcontractor’s carrier may [...]
The question of whether a construction defect is covered by commercial general liability (“CGL”) insurance is a hotly contested issue throughout the United States. A recent construction law article identifies four states that have passed statutes to require construction defect coverage under CGL insurance policies. The article may be found here. The states that have passed statutes are Colorado, Hawaii, Arkansas and South Carolina. The Colorado statute creates a presumption [...]
I have enjoyed the new show Longmire on A&E. One episode the other night involved a crooked social service worker who was taking kickbacks for removing kids from Native American families and placing them with Caucasian adoptive parents. I then read an article in Engineering News Record about a construction company engaged to build a county’s privately developed and operated juvenile justice facilities that was bribing judges to incarcerate more [...]
This is the first in a series of posts authored by Anne Marie O’Brien, a partner in LDM’s litigation department. Ms. O’Brien has agreed to draw upon her experiences with insurance coverage disputes to provide information about growing insurance issues for construction companies. This article addresses your risks associated with Polution Exposure and whether you have coverage for this type of problem. By Anne Marie O'Brien All builders have a [...]
