{"id":902303,"date":"2024-02-21T14:27:18","date_gmt":"2024-02-21T21:27:18","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902303"},"modified":"2025-12-17T11:16:58","modified_gmt":"2025-12-17T18:16:58","slug":"construction-defect-during-construction-is-it-occurrence","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-during-construction-is-it-occurrence\/","title":{"rendered":"If a Defect Occurs During Construction, Is It an &#8220;Occurrence?&#8221;"},"content":{"rendered":"\n<p>Brendan J. Witry | <a href=\"https:\/\/abaconstructionforumdivision1.blogspot.com\/2024\/01\/courthouse-reporter-series-if-defect.html\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">The Dispute Resolver<\/a><\/p>\n\n\n\n<p>Establishing <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/faulty-workmanship-no-coverage-construction-defect\/\">insurance coverage for construction defects<\/a> is almost as important as establishing liability in the underlying construction defect litigation itself.<\/p>\n\n\n\n<p>The risk to the defendant contractor of defending a construction claim can place significant burdens on a contractor\u2019s operations and an uninsured judgment might even put the contractor out of business.<\/p>\n\n\n\n<p>For owners, suing a contractor for construction defects can become academic if there is no prospect of insurance coverage; obtaining a $1 million judgment against a contractor with limited assets would be a pyrrhic victory.<\/p>\n\n\n\n<p><a href=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEgrtJW8cxM_X-sRy7rSMWANSp0iDhNP9WqD3Lr3_XTxuYy7M1-5Ncf2DmETHxDod0-Exo07kzsjcUiAEskMhtLDpXl6Hbyl1EIEfROGHZdaU31OcySnWhMF9McZDUknw-5ivQxEpTw5oGpngXVoPyFwaN_TPcvjO0I0oYXMhN2moenwNZCySOAPPSI6sq9k\/s3992\/pexels-steffen-coonan-2098624.jpg\"><\/a><\/p>\n\n\n\n<p>Commercial General Liability (CGL) carriers are obligated to defend claims that potentially fall within the coverage granted by the policy.<a href=\"file:\/\/\/C:\/Users\/bwitry\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/1ZHOYPTW\/TDR%20CGL%20insurance%20coverage.docx#_ftn1\">[1]<\/a>&nbsp;When presented with a claim, CGL insurers typically have three options: (1) assume the defense without reservation; (2) assume the defense asserting defenses to coverage, and depending on the state, reserving the right to recover defense costs if it later determines there is no duty to defend; or (3) deny the claim outright and seek a declaratory judgment holding that the insurer has no duty to defend or indemnify. An insurer may deny the claim outright and not seek a declaratory judgment, but does so at its peril because it can expose the insurer to significant liability if the insured later shows the insurer in fact had a duty to defend.<\/p>\n\n\n\n<p>In construction defect cases, claims typically arise from \u201coccurrences\u201d under the \u201cproperty damage\u201d coverage afforded by CGL policies. Whether a claim involves an \u201coccurrence\u201d such that there is \u201cproperty damage\u201d varies from state to state.<\/p>\n\n\n\n<p>In some states, damage to the contractor\u2019s defective work itself will be deemed an \u201coccurrence.\u201d In others, there must be damage to property other than the work itself (i.e., personal property of the owner\/tenant) before an occurrence will be found.&nbsp;<em>Black &amp; Vetach Corporation v. Apsen Insurance (Uk) Ltd.,&nbsp;<\/em>882 F.3d 952 (10<sup>th<\/sup>&nbsp;Cir. 2018) (construing New York law to suggest that a subcontractor\u2019s defective work damaging others\u2019 work could be an occurrence).<\/p>\n\n\n\n<p>The law in a handful of states (e.g., Kentucky) is that virtually no occurrence can ever be the result from faulty workmanship.&nbsp;<em>See<\/em>&nbsp;<em>Cincinnati Ins. Co. v. Motorists Mut. Ins. Co.<\/em>, 306 S.W.3d 69 (Ky. 2010);&nbsp;<em>Martin\/Elias Properties LLC v. Acuity<\/em>, 544 S.W.3d 639 (Ky. 2018) (because contractors intended to build a structure and had control over the construction, the faulty workmanship is not \u201caccident[al]\u201d so as to qualify as an occurrence).<\/p>\n\n\n\n<p>Notwithstanding the Kentucky approach, in recent years, the trend has been for more states to recognize a duty to defend in construction defect cases.<\/p>\n\n\n\n<p>In&nbsp;<em>Acuity v. M\/I Homes of Chicago, LLC<\/em>, 2023 IL 129087, the Illinois Supreme Court recently clarified that defective work causing property damage is an occurrence, overruling decades of patchwork appellate decisions. The Illinois Supreme Court expressly rejected the notion that there must be damage to other property besides the work.&nbsp;&nbsp;The Michigan Supreme Court held similarly after analyzing the changes of the 1986 changes to the CGL policy-language in&nbsp;<em>Skanska USA Building Inc., v. MAP Mechanics Contractors, Inc.,<\/em>&nbsp;952 N.W 2d. 402 (Mich 2020).<\/p>\n\n\n\n<p>This patchwork approach can be challenging to navigate. Given that CGL policies offer nationwide coverage and typically lack a choice of law provision, they may invoke difficult choice-of-law issues, as well. However, as construction litigators, we would be doing our clients a disservice if we do not attempt to understand them.&nbsp; &nbsp;&nbsp;<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><a href=\"file:\/\/\/C:\/Users\/bwitry\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/1ZHOYPTW\/TDR%20CGL%20insurance%20coverage.docx#_ftnref1\">[1]<\/a>&nbsp;CGL insurers typically have a broader obligation to defend than to indemnify, even if the merits of the suit are suspect.<\/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","protected":false},"excerpt":{"rendered":"<p>Brendan J. Witry | The Dispute Resolver Establishing insurance coverage for construction defects is almost as important as establishing liability in the underlying construction defect litigation itself. The risk to the defendant contractor of defending a construction claim can place significant burdens on a contractor\u2019s operations and an uninsured judgment might even put the contractor&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-during-construction-is-it-occurrence\/\">Continue reading <span class=\"screen-reader-text\">If a Defect Occurs During Construction, Is It an &#8220;Occurrence?&#8221;<\/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":[4,9914],"tags":[9895,19,23],"class_list":["post-902303","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-coverage","tag-advise-consult","tag-construction-defects-2","tag-insurance-coverage","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>If a Defect Occurs During Construction, Is It an &quot;Occurrence?&quot; 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