Court Rules on Damage Caused by Faulty Work

Builder general liabiity insurance

Court cases nationwide are split on the issue of whether or not construction defects are considered occurrences.

A ruling by the Georgia Supreme Court that negligent construction resulting in damage to surrounding property constitutes an occurrence under a commercial general liability policy is the latest in a string of such decisions with courts divided on the issue.

In another recent case in Hawaii, Group Builders Inc. and Tradewind Insurance Co. Ltd. vs. Admiral Insurance Co., the Hawaii Supreme Court ruled that damage from construction defects was not considered an occurrence. Because of this and other cases, some insurers and re-insurers have began to amend policy language to say that poor workmanship does not constitute an occurrence. However, property damage stemming from the poor workmanship itself would be considered an occurrence.


SOURCE: Michael Bradford, Business Insurance
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