{"id":892976,"date":"2017-09-28T11:30:45","date_gmt":"2017-09-28T17:30:45","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892976"},"modified":"2017-09-28T11:30:45","modified_gmt":"2017-09-28T17:30:45","slug":"insurance-coverage-construction-defect-claims","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/insurance-coverage-construction-defect-claims\/","title":{"rendered":"Insurance Coverage for Construction Defect Claims"},"content":{"rendered":"

Gabrielle T. Kelly | Brouse McDowell<\/a> | September 22, 2017<\/p>\n

Good news for businesses in the construction industry: South Dakota has become the latest jurisdiction to hold that construction defect claims are covered by commercial general liability (CGL) policies. In\u00a0Owners Insurance Company v. Tibke Construction, Inc., et al.<\/em>, the South Dakota Supreme Court held that an alleged failure to conduct soil testing was an occurrence that triggered coverage under the insured\u2019s CGL policies. In\u00a0Tibke<\/em>, the policyholder, Tibke Construction (\u201cTibke\u201d), was hired as a general contractor to build a house. Tibke, in turn, hired Jerry\u2019s Excavating, Inc. as a subcontractor to prepare the soil and perform excavation work. Several years after Tibke completed the house, the homeowners sued Tibke because of cracking and structural unsoundness in the home that they allege resulted from a failure to conduct soil compaction testing before construction.<\/p>\n

Tibke sought coverage for the lawsuit from its insurer, Owners Insurance Company (\u201cOwners\u201d). Owners accepted the claim under a reservation of rights, and then filed a declaratory judgment action against its insured to determine coverage. Owners asserted that faulty construction was not an occurrence under the policies, and that the \u201cYour Work\u201d exclusion precluded coverage for the claim. Both parties moved for summary judgment on the question of coverage. The trial court denied both motions on the grounds that there were questions of fact that still needed to be decided. The parties filed immediate petitions for appeal that the Court granted.<\/p>\n

After hearing the arguments by both parties, the Court affirmed the lower court\u2019s judgment denying Owners\u2019 motion and reversed the judgment denying Tibke\u2019s motion. The Court held that a deliberate action, such as faulty work, performed negligently is an accident if the effect is not the expected or intended result. Accordingly, the allegations, if true, constituted an occurrence under the insured\u2019s CGL policy. The Court also rejected Owners\u2019 argument that the \u201cYour Work\u201d exclusion precluded coverage. Because the exclusion focused on the repair, restoration, or replacement of a specific part of the property, the Court found that the policy did not preclude coverage where the whole house suffered damage for work performed on the soil beneath it.<\/p>\n

What\u2019s the takeaway for policyholders? Courts are analyzing the policy language and fixating on whether the result was an \u2018accident\u2019. In fact, a majority of state supreme courts who have decided this issue have ruled that faulty workmanship can be an occurrence. Thus, policyholders need to carefully review their policy language and not rely solely on their insurance company to tell them whether a construction defect claim is covered by their policies.<\/p>\n","protected":false},"excerpt":{"rendered":"

Gabrielle T. Kelly | Brouse McDowell | September 22, 2017 Good news for businesses in the construction industry: South Dakota has become the latest jurisdiction to hold that construction defect claims are covered by commercial general liability (CGL) policies. In\u00a0Owners Insurance Company v. Tibke Construction, Inc., et al., the South Dakota Supreme Court held that… Continue reading Insurance Coverage for Construction Defect Claims<\/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":false,"_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":[4,3],"tags":[309,9895,19,68,3],"class_list":["post-892976","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-occurrence","tag-advise-consult","tag-construction-defects-2","tag-faulty-workmanship","tag-insurance-claims","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nInsurance Coverage for Construction Defect Claims - 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