CGL Coverage Dispute Regarding the (J)(6) and (J)(7) Property Damage Exclusions

David Adelstein | Florida Construction Legal Updates

A new insurance coverage opinion dealing with a commercial general liability’s (CGL) duty to defend involved exclusions commonly known as the (j)(6) and (j)(7) property damage exclusions (and in certain policies known as the (j)(5) and (j)(6) exclusions). These are the exclusions that apply during ongoing operations.  Exclusion (l), or the “your work” exclusion, applies post-completion, i.e., it is an exclusion for “property damage” to “your work” included in the “products-completed operations hazard.

Exclusions (j)(6) and (j)(7) in the policy at-issue exclude coverage for property damage to:

(j)(6) That particular part of real property on which any insured or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations;

(j)(7) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

In this coverage dispute, Southern-Owners Ins. Co. v. MAC Contractors of Florida, LLC, 2023 WL 2709389 (M.D.Fla. 2023), a CGL carrier denied coverage and the duty to defend in a residential construction defect lawsuit. The underlying dispute pertained to a contractor (insured) not finishing its construction due to a dispute with the homeowners. The homeowners claimed the work was defective and alleged various defects:

“[r]epair loose, broken or chipped pavers in driveway and walkways and install edge restraints”; “[r]epair underside of lap siding – inconsistent paint finish at bottom of boards”; “[r]epair chatter marks on T&G ceilings”; “repair damage to all exterior doors” and “[r]epair all pocket doors”; “[r]eplace damaged top stair tread”; “[r]emedy damage to hardwood floors, includ[ing] damage resulting from use of blue tape and dirt”; “[r]epair metal roof dents, scratches and hems”; “[c]lean wall and ceiling paint on cabinets”; “[r]emove paint spots on baseboards throughout the house”; “[r]emedy scratches in granite”; and “[p]atch and paint all holes in ceilings and walls and twin holes in exterior hardi plank.”

The contractor resolved the underlying lawsuit with the homeowners, but the issue was whether the carrier should have defended the contractor in this underlying lawsuit and incurred the defense fees and costs. If so, the carrier would need to reimburse its insured.  There are times where the main focus of the coverage dispute is on the duty to defend and less about the duty to indemnify. The duty to defend is a critical duty and should NOT be overlooked or cast aside.

Initially, the trial court granted summary judgment in favor of the insurer based on the “your work” exclusion in exclusion (l). However, this was reversed by the Eleventh Circuit finding that the “underlying complaint could fairly be construed to allege damages that fell outside the exclusion.” Southern-Owners Ins. Co., supra, at *2.

On remand, the trial court again entered summary judgment for the insurer finding that the underlying complaint “did not allege ‘property damage’ within the meaning of the CGL policy…did not allege any damage beyond the faulty workmanship or defective work….”  Id.  The Eleventh Circuit again reversed finding “that the underlying operative complaint can be fairly construed to allege ‘property damage’ within the meaning of the CGL policy and Florida law.” Id.  The Eleventh Circuit also previously held that, regardless, the completion-operations hazard exclusion would also NOT eliminate the carrier’s duty to defend. Id.  “The Eleventh Circuit held: ‘Construing the Your Work exclusion narrowly and resolving all doubts in favor of [the contractor], we conclude that the underlying allegations can fairly be construed to allege damage during ongoing operations.” Id. at *4.

So, back to the trial court on more summary judgments.  Is the third time the charm here for the insurer?  No! The trial court, this time, granted summary judgment for the insured finding the carrier had a duty to defend.

Since it was previously held that the completed-operations hazard exclusion would not eliminate the carrier’s duty to defend, the primary focus was on the (j)(6) and (j)(7) exclusions. The carrier’s fundamental argument was that the phrase, “That particular part of” (as underlined above) refers to the entire project. The contractor argued these exclusions don’t apply “to property damage that occurred during operations on the property as a whole ‘but at a moment in time whether neither [the contractor] nor its subcontractors specifically worked on’ the ‘particular part of [the] property’ that was damaged or must be restored, repaired, or replaced.’”  Southern-Owners Ins. Co., supra, at *2.

As to the (j)(6) and (j)(7) exclusions, the trial court reasoned (relying on various case citations):

[I]f a subcontractor is hired to install a project component and, by virtue of his faulty workmanship, installs a defective component, then the cost to repair the defective component is not property damage. On the other hand, a claim for the costs of repairing damage to other property caused by defective work does qualify as a claim for property damage.

Property damage occurs when the damage happens, not when the damage is discovered or discoverable. And where the underlying allegations, even though silent as to the timing of damages, can be reasonably construed to allege property damage that occurred during the policy period, there is potential for coverage.

The[se] exclusions are triggered only when the faulty work and the damage are to the same part of the property. The potential for coverage is triggered when an occurrence results in property damage. There is not requirement that the damages manifest themselves during the policy period. Here, although the underlying allegations are silent as to the timing of the damages, the allegations can be reasonably construed to allege damages that occurred during ongoing operations. Under paragraph j7, property damage to that particular part of any property that must be restored, repaired or replaced because your work was incorrectly performed on it is excluded from coverage.  Paragraph 7 does not apply to property damage included in the products-completed operations hazard, which excludes work that has not yet been completed or abandoned.

Southern-Owners Ins. Co., supra, at *5-6 (internal citations and quotations omitted).

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Someone Who Hires an Independent Contractor May Still Be Liable, But Not in This Case

Katherine Dempsey | The Subrogation Strategist

In Allstate Veh. & Prop. Ins. Co. v. Glitz Constr. Corp., 2023 N.Y. App. Div. LEXIS 1180, 2023 NY Slip Op 01171, the Supreme Court of New York, Appellate Division, Second Department (Appellate Court), considered whether a contractor could be found liable for its subcontractor’s alleged negligence in causing injury to a homeowner’s property. The homeowner’s insurer, as subrogee of the homeowner, sought to recover damages from the contractor despite an allegation that the subcontractor – an independent contractor – caused the injury to the homeowner’s property. Finding that there was no evidence that any of the exceptions to the non-liability rule related to hiring independent contractors applied, the Appellate Court affirmed the lower court’s decision granting judgment in favor of the contractor.

In this case, the homeowner hired the contractor (defendant) to convert her garage area into a bedroom and an office. The defendant later hired a subcontractor to perform the electrical rough-in work. At trial, the homeowner’s insurer (plaintiff) presented evidence that the subcontractor, who damaged an existing wire with a drill bit, caused an electrical failure that resulted in a fire. The defendant argued that it could not be held liable for the subcontractor’s alleged negligence because the subcontractor was an independent contractor and, on appeal, the Appellate Court agreed.

Although the court recognized the general rule that a party who retains and independent contractor – as distinguished from an employee or servant – is not liable for the independent contractor’s negligence, the rule is subject to a number of exceptions.  As noted by the court, one exception applies when the employer of an independent contractor controls the methods and means of by which the work is performed.

Although the question of whether an actor is an independent contractor or an employee for the purposes of tort liability is usually a factual issue for the jury, when there is no conflict in the evidence the question may properly be determined as a matter of law. Here, the Appellate Court found that trial court correctly ruled as a matter of law that the plaintiff failed to present any evidence that the defendant controlled the means by which the subcontractor performed his work.

In reaching its decision, the Appellate Court analyzed another exception to the non-liability rule, the nondelegable duty exception, and clarified that “a duty is nondelegable when the responsibility is so important to the community that the employer should not be permitted to transfer it to another.” For the following three reasons, the court determined that the plaintiff also failed to establish that the performance of the electrical rough-in work was a nondelegable duty:

(1) there was no evidence that the defendant assured the homeowner that it would perform the rough in work itself;

(2) there was no evidence that the defendant held itself out to the public as an entity that specifically performed that type of work; and

(3) the terms of the renovation contract do not create a nondelegable duty with regards to the rough-in work.

This case serves as an important reminder as to why it is critical to seek liability against the right party. Although it may be tempting to pursue the bigger target in subrogation matters, recovery efforts can quickly come to a halt when the burden of proof cannot be met. Here, the plaintiff failed to establish that the defendant was liable because there was no evidence to contradict the fact that the subcontractor was an independent contractor, rather than an employee, or that an exception to the rule applied.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Fire Investigations and the Internet of Things

Nicholas W. Siewert | Litigation Defenders

The advancements in technology have resulted in the increased connectivity of devices and even whole building systems. This means the Internet of Things (IoT) is an additional tool for fire investigations.

Internet of Things Graphic

Over the last 10 years, modern construction has increased the use of integrated IoT building management systems, which include smoke alarms, fire suppression systems, heating, and cooling systems (HVAC), access control systems, and even automated machines. When each of these systems is part of an IoT ecosystem, fire investigators have additional data points to assist in making origin and cause determinations.

Smoke alarms are the most obvious and simplest sources of data to narrow origin, but how would other devices assist? A great example is a fire that occurred at a nail salon equipped with a digital electrical meter and IoT-enabled HVAC system. The electrical meter tracks power usage down to the minute, allowing investigators to determine the exact minute the fire began imping on branch circuits and which direction the fire spread, based upon usage declines associated with equipment draw loads cessations.

Knowing that before the fire, the typical draw was 100 kilowatts per hour (kWh) an hour. But an hour before the fire department arrived, the draw dropped to 95 kWh, or the amount the dehumidifier draws, telling us when there was fire impingement on the dehumidifier. If the dehumidifier is in the suspected area of origin, then the origin point can be determined with greater accuracy.

Alternatively, if the meter shows 0 kWh draw 40 minutes before the arrival of the fire department, then an investigator can approximate when the fire burned through the drywall and began to impinge on the branch circuits. Competent investigators can approximate an ignition time and support area of origin determinations by working backward (i.e., two-hour fire rating drywall), the distance of impingement from the potential area of origin and available fuel packages.        

Another real world example is a fire that occurred at an unoccupied warehouse. The warehouse was equipped with a monitored burglar alarm and interior video system. Using sketches of the video camera, electrical circuitry and ethernet locations, investigators could use the signal loss notifications from each of the cameras and burglar alarm activations to develop a timeline of events and overlay those data points onto a map of the structure. As a result, investigators were able to narrow down the area of origin to a 20-square-foot area of the total 104,000 square feet burned.

With the inclusion of internet connectivity in more devices and building systems, leveraging them for the origin and cause investigations is approaching near universality. While the presence of data is helpful, the sabotage or disruption of that IoT is relevant to supporting hypotheses of human factors as causes. Not only is IoT data, or the absence of that data, unbiased and truly reliable, it is superior to witness statements and fire pattern analysis. Because fire pattern interpretation and witness statements can be the basis for alternative hypotheses by competing experts, IoT data shut the door on “creative” interpretations. IoT data is a powerful tool in the modern fire investigation arsenal, only increasing in usefulness as technology advances.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Flood and Water Damage: Which Insurance Policy Do You Turn To?

Emanuel Enes | Woodruff Sawyer

The new year brought a series of ferocious storms that ravaged the California coast for weeks. By mid-January, this so-called “atmospheric river” caused at least eight million Californians to be under flood watch as wind and rain pummeled the state.

According to the California Geological Survey, more than 400 landslides occurred from December 30th through January 15th as heavy downpours lashed the drought-stricken and fire-scarred state.

As experts predict the increased frequency and duration of severe storms throughout the nation due to climate change, home and business owners are grappling with many questions. Chief among them is what is and what isn’t covered by their insurance policies and what they can do to protect their property.

Boots on flooded floor

The differences between flood damage, water damage, and sewer and drain back-ups in terms of insurance coverage can be confusing. This article aims to help you better understand the key differences and how they affect your coverage.

What Is Flood Insurance?

The Federal Emergency Management Agency (FEMA) defines a flood as a “general and temporary condition of partial or complete inundation of two or more acres and two or more properties of normally dry land.” The agency states that the causes of a flood include the following:

  • Overflow of inland or tidal waters.
  • Unusual and rapid accumulation or runoff of surface water from any source.
  • Mudflow, defined as “a river of liquid and flowing mud on the surfaces of normally dry land areas, as when the earth is carried by a current of water.”
  • Collapse of land along the shore of a lake, river, or similar body of water due to erosion or undermining caused by waves or currents of water exceeding expected cyclical levels.
Most homeowners’ insurance policies don’t cover flood damage.

According to the National Flood Insurance Program (NFIP), a standard flood insurance policy is a single-peril policy that pays for direct physical damage to your insured property up to the replacement cost or the actual cash value (ACV) of the actual damages or the policy limit of liability, whichever amount is less.

Note that you need separate coverage for flood damage to your personal possessions and furnishings inside the property.

Most commercial/business policies also exclude flood unless endorsed onto the policy.

The deductible for the flood peril is usually a higher value than the deductible for other perils and/or may be a monetary value or percentage of the reported values, such as 2% or 5%. These higher deductibles and flood zone maps can substantially impact the coverage, and clients experience a higher retention of their loss.

What Is Water Damage Coverage?

Whereas flood insurance covers damage from sudden acts of nature, water damage policies protect against sudden and accidental water damage from incidents like burst pipes and overflowing bathtubs/toilets or washing machines.

This type of insurance typically does not cover damage that results from floodwaters or the property owner’s neglect.

However, there can be some relationship between Mother Nature’s floods and water damage. For example, in most cases, if a heavy storm destroys your roof, the resulting interior damage would be covered by a water damage policy, not a flood policy.

What Is Sewer Backup Coverage?

Another type of coverage that can get confusing during these times of increased severe weather events is the sewer backup coverage on the policy.

The Insurance Services Office (ISO) defines sewer backup as “water that backs up or overflows from a sewer, drain, or sump.” However, if you’ve experienced a sewer backup in your property, you’d probably agree that the term “sludge” might be more accurate than “water.”

Once again, drain and sewer backups are often related to natural events or blockages of the drain line within or outside the property boundaries. However, they may not be covered by flood insurance. It depends on how the “water” enters the building and how well the drainage systems are maintained. Some insurers interpret a blockage outside the property line as a “backup” and a blockage within the property lines as a “fill-up.” Backups are typically excluded unless the policy extends coverage under the sewer and drain endorsement, whereas fill-ups are more likely to be covered as water damage. Coverage is contingent on the proximate cause and location of the backflow.

How Can You Better Protect Your Property from Water-Related Damage?

As severe weather-related events become more commonplace, understanding your insurance coverage is more critical than ever. For example, it’s surprising how many people do not know that standard homeowners’ policies do not cover damage caused by flood events.

Here are a few other areas to consider:

  • Mold: Standing water caused by flooding can create mold, mildew, and fungus issues in a very short time if mitigation efforts are not taken.
  • Appliances versus furnishings: Appliances that service your entire building (like water heaters, furnaces, and washers and dryers) may be covered under a flood policy but carpeting and wall finishings usually are not. Coverage differs by policy type, such as whether it’s a homeowners’ or commercial policy.
  • Basements: You may have limited or no coverage for the basement of your property.
  • Contamination: Flooded walls, floors, and other areas can become contaminated, attracting insects, rodents, and other pests.
Experts estimate that as much as 90% of the recent natural disasters in the US involve flooding.

Your property can be at risk even if you don’t live in what is classified as a high-risk area for flooding. In fact, one in three insurance claims come from moderate- to low-risk flood areas, according to FEMA.

If you have questions about your current coverage and how you can better protect your property, speak with your Woodruff Sawyer representative.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Mitigating or Preventing Water Damage

Kevin Moore | Woodruff Sawyer

Water’s capacity to inflict severe and costly damage looms large over all construction projects. Whether it’s caused by Mother Nature or human error, water damage presents a ubiquitous threat. Because construction water damage claims can climb to hundreds of thousands of dollars, it’s worth taking steps to mitigate or prevent incidents, if possible. The cause of water damage largely dictates how an insurance policy responds to a construction-related claim. Losses can include property damage, debris removal, delayed costs, lost profits, and more.

Heavy duty crane truck construction site
The Two Major Sources of Water Damage

Construction site water damage threats exist both within a project itself and from external factors, such as the weather. Rain is the most likely external factor that can cause water damage, as it may get into any exposed or unfinished area and damage the structure and equipment.

Internally, faulty installation, physical defects, or incidental construction damage may cause bursting or gradual leaking in plumbing and sprinkler systems. Accidents are also a possibility; projects sites are naturally busy with lots of moving parts. Workers may accidentally damage a water source or puncture a pipe through a wall. Whether water damage is caused by internal or external events, costly project delays can be expected in the wake.

Keep an eye out for typical internal risk factors, including:

  • Uncovered building openings
  • Water delivery/drainage/sprinkler system failures
  • Subsurface drainage problems
  • Building envelope system deficiencies
  • Site draining problems
Identifying Water Damage Risks

A construction site’s risk exposure rises with every inch of water system it contains. The more water sources there are nearby, there is a greater risk of exposure. Each source, drain, and potential problem should be identified before construction begins.

Be aware that even the smallest design flaw—in the water systems or the building itself—can allow water to spread quickly through a construction site.

Try to identify the potential for two kinds of common construction water problems:

  • Busting pipes
  • Gradual leaks

Piping system failure is one of the most common and destructive causes of water damage. Older pipes are particularly at risk, so they should be attentively maintained and tested.

External factors may also lead to pipe bursting. For example, freezing temperatures can cause ice to build up in pipes, and ice build-up can cause pipes to burst. Earthquakes are another external threat. Facilities in earthquake-prone areas (like California) should prepare for leaks and breaks by ensuring piping components are sway-braced.

Gradual leaks might be less noticeable when they occur, but they can cause significant damage if allowed to continue. Frequently monitor for leaks of any size and address the root issue as soon as possible.

Understand Your Insurance Policy

Prepare for water damage to your construction site by carefully reading your insurance policy to discern what coverages, deductibles, and limits apply. Remember that a policy’s response to the claim is contingent on the source of the water damage. Notably, a policy will typically differentiate between damage caused by a flood and damage from other sources, including on-site leaks. Make sure you understand how flooding is defined and fits into the coverage.

Mitigation Process


Perform a constructability review to identify and eliminate design failures that potentially could cause water damage.

  • Evaluate contract documents and insurance policy language.
  • Evaluate specified materials/systems and how they will interrelate.
  • Evaluate the site for water drainage.
  • Ensure the drainage of water away from the structure and planned excavations when performing site planning and preparation.

Schedule the installation and testing of piping systems, such as hydronic systems, as early as possible in the project.

During Construction

Remain aware and identify potential problems that may lead to water damage.

  • Properly supervise work of subcontractors.
  • Perform quality control checks.
    • Identify and resolve potential water issues quickly.
  • Mock-up all critical waterproofing systems in advance.
    • Test areas of the mock-up that are prone to water infiltration and ensure any issues are addressed.
    • Schedule a mock-up review meeting with project personnel to discuss potential waterproofing issues.
    • Schedule a meeting to discuss critical building system details and inspection concerns.
    • Include mock-up approval as an activity in the schedule.
  • Develop a severe weather plan that assigns responsibilities for securing the site and mitigating any water damage. The plan should address:
    • Take steps to secure and shield the site in the event of a rainstorm.
    • Develop a specific and detailed response plans for each potential weather threat.
  • Perform a final inspection and pressure test immediately before charging piping systems with water even if the system has previously passed a hydrostatic test.
    • Piping systems may be altered either intentionally or unintentionally, resulting in a water release upon charging. The pipes should routinely be inspected and approved before charging.
  • Protect excavations from the accumulation of water which can potentially infiltrate the structure, alter the moisture content of affected soils and/or undermine the foundations.
  • Maintain backup storage plans for water-sensitive materials and equipment.
Post Construction
  • Address construction defects.
  • Maintain a quick-response team for warranty issues. Any water issues should be resolved within a maximum of 48 hours or sooner, if possible.

Most threats of water damage to your construction site can be prevented. Take the cautionary steps, including knowing the most likely threats, both catastrophic and small, and identifying internal and external sources of water damage. Further, it’s important to understand your insurance policy and how it responds to various claims.

Staying a step ahead of water damage threats can save time and money for your construction project. While you can’t eliminate every risk, you’ll mitigate the vast majority of them.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email