A Florida contractor is hired by a property owner to renovate an investment property (house). The property owner lives in NY and the property is in Florida. The house has been unoccupied before and during the renovations. The contractor is the only person that had a key to the property.
Sometime during the renovations, it appears, but we cannot confirm, the contractor, or one of his subcontractors, left the entry door unlocked. Subsequently, it appears someone entered the home and either intentionally or unintentionally caused a fire that severely damaged the home.
The fire department report did confirm that, upon arrival, the entry door was closed, but not locked, and there were no signs of forced entry to the home.
The property owner does not have insurance on the property. Would the contractors Liability insurance be responsible to pay for the damages? Would it have to be proven beyond the shadow of a doubt that the contractor or his subcontractor did not secure and lock the home in order to contractor's liability insurance to be responsible for the damages? What would have to be proven in order for the contractor's insurance to be responsible?
I am sure I will have follow up questions after reading the FC&S answer.
Florida Subscriber
We do not see coverage for this loss available under the ISO CGL form for the contractor's liability. Looking at exclusions k. and l., the house was not the contractor's product, so that exclusion would not apply; and since the work was not yet completed, the damage to your work exclusion also would not apply, regardless if it was the contractor or subcontractor who left the door unlocked.
The exclusion that does apply here however, is exclusion j. Damage to Property (5), as follows:
(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or
Since the contractor had not yet completed the work it does not fall within the description of products-completed operations. As such, since the contractor was still in effect 'performing operations' at the real property, the exclusion applies and there is no coverage.
We can't speak to what's required to prove legal liability – that is for the courts to decide. All we can do is discuss policy language. If the contractor was found to be legally liable by whatever means, there is no coverage under the policy because of the exclusions mentioned. Should a claim be filed the carrier will investigate and make a determination of coverage at that time.