The Issue. In Ohio and nationally, insurers and policyholders continue to battle over whether there is insurance coverage for injury or damage that arises from defective construction. The questions are complicated. While it is nearly universally true that an insurer won’t pay solely for the repair of an insured’s own faulty work, what about damage to other work or materials of the insured or third-parties? Is there coverage for work performed on your behalf by a subcontractor? And, what if repair of the insured’s work requires further damage to the work of others?
Why It’s Important. The answer to these questions can mean the difference between receiving no coverage under your commercial general liability policy and getting a full defense and indemnification from your insurer. And, many of these issues have not been completely resolved and continue to be developed in the courts.
Short Answer. The majority of states, including Ohio, recognize that construction defect claims are covered, at least in part, where the faulty work causes damage to property other than the policyholder’s own work. But the amount of coverage available for judgements or settlements can vary greatly depending on the jurisdiction, the specific facts of the claim, and the policy language in your particular policy. Listen as we explore the considerations savvy policyholders consider in evaluating this risk, and discuss the availability of new policy endorsements to minimize the risk of an uncovered claim.
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