Restores General Liability Intent
As discussed in a number of previous articles, the recent South Carolina Supreme Court made a horrible decision on Crossmann v. Harleysville. It perverted the intent of the drafters of the General Liability policy and created a fiction that builders intended property damage to arise from accidental faulty construction. The ruling was opposed by a grass roots coalition of builders, developers, owners, subcontractors, and some attorneys. Bill S-431, was quickly introduced to counter Crossmann and was passed overwhelmingly by the legislature and signed into law on May 17, 2011 as SC Code 38-61-70. This law prevents builder General Liability insurance carriers from using the no occurrence claim denial strategy.
“Section 38-61-70 (1)(b) mandates the 1986 CGL policy, to the extent that it applies to ‘construction professionals’ is ‘deemed’ to contain a definition of ‘occurrence’ that includes: (1) an accident, including continuous or repeated exposure to substantially the same general harmful conditions; and (2) property damage or bodily injury resulting from faulty workmanship, exclusive of the workmanship itself.”
However, this isn’t the last word, due to the following new developments:
- The South Carolina Supreme Court reheard arguments on the Crossmann case on May 23, 2011 as a result of complaints from the construction industry.
- The Harleysville Insurance Company filed a lawsuit on May 23, 2011 with the South Carolina Supreme Court arguing that 38-61-70 is unconstitutional and should be overturned.
Expect decisions on both these arguments within the next several months.
The newly enacted SC Code 38-61-70 is a positive development that corrects a serious case of faulty logic and misunderstanding by the court as evidenced by Crossman v. Harleysville. However, it’s unfortunate that the legislature had to become involved.