{"id":902067,"date":"2024-01-02T15:56:38","date_gmt":"2024-01-02T22:56:38","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902067"},"modified":"2024-01-02T15:56:40","modified_gmt":"2024-01-02T22:56:40","slug":"construction-defect-occurrence-illinois-joins-pack","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-occurrence-illinois-joins-pack\/","title":{"rendered":"Illinois Joins the Pack on Defective Construction as an Occurrence"},"content":{"rendered":"\n<p>Anna M. Perry | <a href=\"https:\/\/www.sdvlaw.com\/insights\/illinois-joins-the-pack-on-defective-construction-as-an-occurrence\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">SDV Insights<\/a><\/p>\n\n\n\n<p>Illinois joins the majority of states finding \u201cproperty damage that results inadvertently from faulty work can be caused by an \u2018accident\u2019 and therefore constitute an \u2018occurrence\u2019.\u201d<\/p>\n\n\n\n<p>The Illinois Supreme Court\u2019s ruling in\u00a0<em><a href=\"https:\/\/caselaw.findlaw.com\/court\/il-supreme-court\/115568344.html\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Acuity v. M\/I Homes of Chicago, LLC<\/a><\/em><sup>1<\/sup>\u00a0(\u201c<em>Acuity v. M\/I Homes<\/em>\u201d) is the first high court ruling in Illinois on this critical coverage issue for contractors. M\/I Homes of Chicago, LLC (\u201cM\/I Homes\u201d) constructed a townhome development. After completion, water entered the townhomes resulting in interior water damage. The townhome owners\u2019 association filed suit against M\/I Homes alleging it, or its subcontractors, caused the damage because it used defective materials, conducted faulty workmanship, and failed to comply with applicable building codes (the \u201cUnderlying Action\u201d). \u00a0<\/p>\n\n\n\n<p>M\/I Homes demanded a defense from Acuity as an additional insured under a general liability policy issued by Acuity to M\/I Homes\u2019 subcontractor, H&amp;R Exteriors, Inc. Acuity denied coverage. Acuity then filed suit against M\/I Homes seeking a declaration that it did not owe M\/I Homes coverage because the Underlying Action did not seek damages for property damage beyond M\/I Homes\u2019 work, rather it only alleged economic losses limited to the cost of repairing and replacing defective construction.&nbsp;<\/p>\n\n\n\n<p>The Court disagreed with Acuity and ruled in favor of M\/I Homes. By applying basic principles of policy interpretation to the policy\u2019s insuring agreement, the Court arrived at, what it affirmatively stated to be \u201cthe correct legal analysis and the correct result.\u201d&nbsp;<\/p>\n\n\n\n<p>The Court first looked to the plain language of the Accuity policy. \u201cOccurrence\u201d was defined as \u201can accident, including continuous or repeated exposure to substantially the same general harmful conditions.\u201d Because \u201caccident\u201d was not defined within the policy, the Court referred to its well-established definition of \u201caccident\u201d<sup>2<\/sup>&nbsp;and then applied it in the context of construction defects. The Court found the Underlying Action sufficiently alleged an \u201caccident,\u201d which, in turn, constitutes an \u201coccurrence.\u201d<\/p>\n\n\n\n<p>Next, the Court reasoned that if all losses because of faulty or defective workmanship can never constitute an \u201coccurrence,\u201d and therefore never trigger coverage under the policy, as Acuity argued, then certain exclusions are rendered meaningless. In dismissing Acuity\u2019s argument, the Court noted that interpreting certain policy language in a way that renders other provisions meaningless is contrary to the well-established policy interpretation principle that all provisions are to be \u201cread together, rather than in isolation, and given effect.\u201d&nbsp;<\/p>\n\n\n\n<p>Finally, the Court found the Underlying Action was not required to allege property damage to property outside the insured\u2019s scope of work in order to trigger coverage. Requiring damage outside of the insured\u2019s scope of work is not based on the policy language and the Court explicitly stated that any prior cases applying this requirement should no longer be relied upon.&nbsp;<\/p>\n\n\n\n<p>This policyholder win further solidifies the trend in courts finding construction defect claims constitute \u201cproperty damage\u201d caused by an \u201coccurrence&#8221; under an unamended Insurance Services Offices commercial general liability policy form. Further information on this topic can be found within SDV\u2019s \u201c<a href=\"https:\/\/www.sdvlaw.com\/docs\/news.25.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Defective Construction as an \u2018Occurrence\u2019\u201d 50-state survey<\/a>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><sup>1<\/sup><em>ACUITY, a Mut. Ins. Co. v. M\/I Homes of Chicago, LLC, et al.<\/em>, 2023 WL 8266295, DKT NO. 129087 (Ill. 2023).<br><sup>2<\/sup>In Illinois, \u201cthe term \u2018accident\u2019 in the policies at issue reasonably encompasses the unintended and unexpected harm caused by negligent conduct.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.sdvlaw.com\/attorney\/Anna_Perry\"><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Anna M. Perry | SDV Insights Illinois joins the majority of states finding \u201cproperty damage that results inadvertently from faulty work can be caused by an \u2018accident\u2019 and therefore constitute an \u2018occurrence\u2019.\u201d The Illinois Supreme Court\u2019s ruling in\u00a0Acuity v. M\/I Homes of Chicago, LLC1\u00a0(\u201cAcuity v. M\/I Homes\u201d) is the first high court ruling in Illinois&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-occurrence-illinois-joins-pack\/\">Continue reading <span class=\"screen-reader-text\">Illinois Joins the Pack on Defective Construction as an Occurrence<\/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":[4,9721],"tags":[9895,19,56],"class_list":["post-902067","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-property-damage","tag-advise-consult","tag-construction-defects-2","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>Illinois Joins the Pack on Defective Construction as an Occurrence - Advise &amp; 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