Answering CGL Coverage Denials in Construction Defect Lawsuits

Legal
Published

The following was excerpted from an article provided by Carson Law Group, PLLC, a law firm based in Jackson, Miss., with a construction and commercial litigation and transactional practice.

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.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Trends

Oct 29, 2025

Do Consumers Want Two-Story Foyers?

Nearly a quarter of new homes were built with a two-story foyer in 2024 — a number that has been trending downward over the past eight years. Though the national decline continued, regional patterns were mixed. See where this feature is hot — and where it's not.

Certified Aging-in-Place Specialist (CAPS) | Education

Oct 29, 2025

How to Market to and Design for the Aging-in-Place Client

NAHB will host three webinars (open to members and non-members) in November to teach the technical, business management, and customer service skills necessary to complete modifications for aging-in-place.

View all

Latest Economic News

Economics

Oct 29, 2025

The Fed Cuts amid Partly Cloudy Conditions

With the government shutdown limiting the quantity of economic data available to markets and policymakers, the central bank’s Federal Open Market Committee (FOMC) enacted a widely anticipated 25 basis point cut for the short-term federal funds rate.

Economics

Oct 28, 2025

Home Price Growth Slows

Home prices in August grew at the lowest annual rate in over two years, according to the recent release of the S&P Cotality Case-Shiller Home Price Index (seasonally adjusted – SA).

Economics

Oct 27, 2025

Two-Story Foyer Trend Stabilizes in 2024

In 2024, nearly a quarter of new homes were built with a two-story foyer, virtually unchanged from 2023, according to data obtained from the Census Bureau’s Survey of Construction (SOC) and tabulated by NAHB.