{"id":892659,"date":"2017-08-02T16:09:32","date_gmt":"2017-08-02T22:09:32","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892659"},"modified":"2017-08-02T16:46:02","modified_gmt":"2017-08-02T22:46:02","slug":"importance-careful-coverage-analysis","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/importance-careful-coverage-analysis\/","title":{"rendered":"The Importance of Careful Coverage Analysis"},"content":{"rendered":"<p>Heather Howell Wright | <a href=\"https:\/\/www.bradley.com\/insights\/publications\/2017\/07\/the-importance-of-careful-coverage-analysis\" target=\"_blank\">Bradley<\/a> | July 2017<\/p>\n<p>Ohio has joined the majority of jurisdictions in holding that a general liability policy may provide coverage for claims made by a project owner for property damage allegedly caused by the defective work of a subcontractor. In\u00a0<em>Ohio Northern Univ. v. Charles Constr. Serv., Inc.,<\/em>\u00a0an Ohio appeals court found coverage. It distinguished a 2012 decision of the Ohio Supreme Court,\u00a0<em>Westfield Ins. Co. v. Custom Agri Systems, Inc.\u00a0<\/em>that seemed to hold, broadly, that \u201cclaims of defective construction or workmanship brought by a property owner are not claims for \u2018property damage\u2019 caused by an \u2018occurrence\u2019 under a commercial general liability policy.\u201d A close comparison of the two cases reveals their consistency and demonstrates that the \u201cdevil is in the details\u201d of any coverage analysis.<\/p>\n<p><em>Coverage for Defective Work<\/em><\/p>\n<p>Most commercial general liability policies are written on standardized forms developed by the Insurance Services Offices. The standard general liability policy provides that it applies to \u201cproperty damage\u201d caused by an \u201coccurrence.\u201d Whether faulty or defective workmanship constitutes an \u201coccurrence\u201d under the general liability policy is a state specific question, and courts across the country are divided on this issue. While some states have held that faulty workmanship or improper construction is not an \u201coccurrence\u201d because it can never be an \u201caccident,\u201d others have held that faulty workmanship can be an \u201caccident\u201d if the resulting damage occurs without the insured\u2019s expectation or foresight. The recent trend has been for courts to find that construction defects or faulty workmanship satisfy the \u201coccurrence\u201d and \u201cproperty damage\u201d requirements under a general liability policy, and that losses sustained as a result of such defects may be covered.<\/p>\n<p><em>The Ohio Cases<\/em><\/p>\n<p>Ohio Northern University (the \u201cOwner\u201d) contracted with Charles Construction Services, Inc. (the \u201cContractor\u201d) to build a luxury hotel and conference center on the Ohio Northern campus (the \u201cProject\u201d). The Contractor subcontracted most of the work to various trade and supplier subcontractors. After construction was complete, the Owner discovered evidence of water intrusion and moisture damage to wall coverings, dry wall, and insulation. Remediation of the damage led to the discovery of additional structural defects.<\/p>\n<p>The Owner sued the Contractor, who, in turn, filed claims against its subcontractors. The Contractor\u2019s insurer, The Cincinnati Insurance Company (the \u201cInsurer\u201d), intervened in the lawsuit and sought a declaration that it had no obligation to defend or indemnify the Contractor. In a motion for summary judgment, the insurer relied on the Ohio Supreme Court\u2019s decision in\u00a0<em>Custom Agri\u00a0<\/em>to support its claim that it had no duty to defend or indemnify the Contractor. The trial court held in favor of the insurer holding that, under\u00a0<em>Custom Agri<\/em>, defective construction was not an occurrence and, therefore, that there was no coverage.<\/p>\n<p>On appeal, the Court of Appeals explicitly rejected the Insurer\u2019s argument that\u00a0<em>Custom Agri<\/em>\u00a0stood for the \u201cexpansive proposition that\u00a0<em>all\u00a0<\/em>claims for defective workmanship, regardless of who performed it, are barred from coverage under a [general liability] policy because such claims\u201d can\u00a0<em>never\u00a0<\/em>constitute a claim for \u201cproperty damage\u201d caused by an \u201coccurrence\u201d under a general liability policy. The Court of Appeals noted that, unlike\u00a0<em>Custom Agri<\/em>, the property damage sustained by Ohio Northern was caused by the defective work of subcontractors, not by the work of the insured Contractor. Moreover, the property damage occurred after the project was completed. Thus, the property damage was within the \u201cProducts-Completed Operations Hazard,\u201d and the insured Contractor had paid supplemental premiums to obtain \u201cProducts-Completed Operations Hazard\u201d coverage. In considering each of these facts, the Court of Appeals reversed the trial court\u2019s entry of summary judgment for the Insurer.<\/p>\n<p><em>Conclusion<\/em><\/p>\n<p>Comparison of these two Ohio cases demonstrates the necessity of conducting a close review of the facts and procedural posture of any coverage case to identify possible bases for establishing coverage.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Heather Howell Wright | Bradley | July 2017 Ohio has joined the majority of jurisdictions in holding that a general liability policy may provide coverage for claims made by a project owner for property damage allegedly caused by the defective work of a subcontractor. In\u00a0Ohio Northern Univ. v. Charles Constr. Serv., Inc.,\u00a0an Ohio appeals court&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/importance-careful-coverage-analysis\/\">Continue reading <span class=\"screen-reader-text\">The Importance of Careful Coverage Analysis<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":true,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,30,9914,9721],"tags":[9895,19,64,23,9120,56],"class_list":["post-892659","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-general-liability-policy","category-insurance-coverage","category-property-damage","tag-advise-consult","tag-construction-defects-2","tag-general-liability-policy-2","tag-insurance-coverage","tag-ohio","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Importance of Careful Coverage Analysis - Advise &amp; 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