Filed Under:Claims, Investigative & Forensics

Construction Defect Claims, Part 2a: Defining An Occurrence

Is Faulty Workmanship Covered By CGL?

Editor's Note: The following has been contributed by Joseph Junfola, Assistant Secretary of Claims at Admiral Insurance, and creator of the "Cause and Effect: Managing the Construction Defect Claim" workshop series. 

In Part 1 of this series, we defined a “construction defect” as a failure of the construction to perform in an intended or expected way because of a defective design, faulty workmanship, defects in building materials, and soil failures. We defined a “construction defect claim” as a claim for damages (i.e. money) because of this failure to perform.

The consequences or effects of the faulty workmanship matter in the analysis of whether the faulty workmanship can be construed as an occurrence, or accident, per the CGL policy. The following questions, always considered in the context of a specific jurisdiction, facilitate the analysis of whether faulty workmanship is an occurrence: 

We will now consider each question in two segments.

Using this definition, it is easy to see how defective workmanship can qualify as an accident and, therefore, an occurrence, if there is property damage to property or work other than that of the named insured’s, and the consequences were not expected or intended by the named insured.

  • The CGL policy…does not define an “occurrence” in terms of the ownership or character of the property damaged by the act or event. Rather, the policy asks whether the injury was intended or fortuitous, that is, whether the injury was an accident. (Lamar 1,9)
  • A few months later, the Florida Supreme Court, in United States Fire Insurance Company v. J.S.U.B., 979 So. 2d 871, put the issue to bed by ruling as follows:

    First, a subcontractor’s faulty work (in this case the sub’s defective soil compaction and testing, and poor soil) that causes damage to the general contractor’s completed project can be an occurrence, if the property damage is neither expected or intended from the standpoint of the general contractor. In addition, to say that damage to the contractor’s work is always foreseeable whereas damage to other work/property may not be foreseeable is an illogical distinction that “would make the definition of ‘occurrence’ dependent on which property was damaged.” J.S.U.B. 871, 883

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