The United State Court of Appeals for the Eleventh Circuit recently interpreted Alabama law to permit insurance coverage for property damage resulting from faulty workmanship. Pennsylvania Nat’l Mut Cas. Ins. Co. v. St. Catherine of Siena Parish, 790 F.3d 1173 (11th Cir. 2015) (No. 14-12151). Penn National issued a general liability insurance policy to a Kiker. Kiker had replaced shingles on a church roof. Subsequent to those repairs, the roof leaked and caused water damage to a ceiling and roof decking. The church obtained a $350,000 judgment against Kiker for breach of the implied warranty that Kiker complete the project using reasonable skill. Penn National then filed a declaratory judgment action against both Kiker and the church. As the district court held, Penn National did not need to indemnify Kiker for the underlying judgment because of the insurance policy’s contractual liability exclusion. On appeal, the circuit court reversed and found coverage for the underlying judgment. The policy required an occurrence, meaning an accident. According to the circuit court, “[w]hen a contractor performs faulty work … there is no accident or occurrence, but, when the contractor’s faulty work creates a condition that in turn damages property, under Alabama law, that damage results from an accident.” Penn National’s argument that Kiker’s breach of contract was intentional and thus not covered was simply another way of saying that repairs to Kiker’s faulty work itself were not covered. The underlying judgment was covered because it was a judgment not for the repairs of the faulty roof work itself but instead for repairs of the ceiling and roof decking water damage caused by leaks resulting from Kiker’s faulty work in replacing the roof shingles. Moreover, the policy’s contractual liability exclusion did not apply. That exclusion precluded coverage for property damage for which the insured was obligated to pay by reason of the assumption of liability in a contract or agreement. A breach of contract claim based on an implied warranty to use reasonable skill in performing work was not an assumption of liability triggering the exclusion; instead, the exclusion would apply where an insured agreed to indemnify another party.