In Auto-Owners Ins. Co. v. Pozzi Window Co., No. SC06-779 (Fla. Dec. 20, 2007), the Florida Supreme Court, in response to the U.S. Court of Appeals for the Eleventh Circuit, answered the following certified question in the negative:
DOES A STANDARD FORM [COMMERCIAL] GENERAL LIABILITY POLICY WITH PRODUCT[S] COMPLETED OPERATION HAZARD COVERAGE, SUCH AS THE POLICIES DESCRIBED HERE, ISSUED TO A GENERAL CONTRACTOR, COVER THE GENERAL CONTRACTOR’S LIABILITY TO A THIRD PARTY FOR THE COSTS OF REPAIR OR REPLACEMENT OF DEFECTIVE WORK BY ITS SUBCONTRACTOR?
The Court found its opinion in U.S. Fire v. J.S.U.B., No. SC05-1295 (Fla. Dec. 20, 2007), issued on the same day as Pozzi, dispositive of the issues in Pozzi. Specifically, the Court in Pozzi held that:
a post-1986 standard form CGL policy with products-completed operations hazard coverage, issued to a general contractor, does not provide coverage for the cost of repair or replacement of a subcontractor’s defective work because the defective work itself did not constitute “property damage.” Although both cases concerned the defective work of a subcontractor and involved identical policy language, Pozzi and J.S.U.B. yielded different holdings. J.S.U.B. involved the cost of repairing structural damage to homes caused by the subcontractor’s defective work, i.e., damage to property other than the subcontractor’s own defective work. Accordingly, the Court in J.S.U.B. deemed the structural damage to be “physical injury to tangible property,” which constituted “property damage” and was covered by the policy.
By contrast, in Pozzi, the only damage was the cost of repairing or replacing windows, which the subcontractor had defectively installed. Thus, the only damage at issue in Pozzi was damage to the subcontractor’s own defective work. Accordingly, while the defective work in Pozzi comprised an “occurrence,” there was no “property damage” and, thus, no coverage under the policy.