One of the risks faced by a home builder is that, following completion of construction, the homeowner may assert a claim against the builder for damage to the home caused by an alleged construction defect. One of the ways a builder manages the risk of such construction defect claims is by purchasing commercial general liability (CGL) insurance.
A builder’s CGL policy covers what the builder is legally obligated to pay as damages due to bodily injury or property damage caused by an “occurrence,” that is, damage that is accidental rather than being expected or intended by the builder, so long as the claim does not fall within any of the policy’s several “exclusions” from coverage.
When faced with a construction defect lawsuit, our builder clients are often surprised and dismayed when their CGL insurer denies coverage and refuses to defend the builder.
But builders shouldn’t take their insurer’s denial of coverage at face value.
Whether coverage exists always depends on the specific language of the particular CGL policy, and courts generally construe exclusions against insurers. This allows experienced coverage attorneys to, at times, successfully challenge declinations of coverage and, at a minimum, convince insurers to pay for the builder’s defense.
We recently discovered a new argument involving a home builder’s Insurance Services Office (ISO) classification that has been a game-changer for our builder clients who were denied coverage in construction defect cases.
Read about it in the full article.