Clarifying its prior decision in High Country Assocs. v. New Hampshire Ins. Co., 139 N.H. 39 (1994), the Supreme Court of New Hampshire recently held that a CGL policy’s insuring agreement does not encompass damage to the insured’s work product. See Concord Gen. Mut. Ins. Co. v. Green & Co. Bdg. & Dev. Corp., No. 2009-699 (N.H. Sept. 17, 2010).
In Concord, the insured’s subcontractor allegedly installed defective chimneys in a housing development, causing excess levels of carbon monoxide to escape into the homes. After some homeowners filed suit, the insured repaired all of the chimneys and settled the lawsuit.
The trial court ruled that the cost of repairing the chimneys was not a covered “occurrence” (defined as an “accident”) under the contractor’s CGL policy, notwithstanding the leaking carbon monoxide. The Supreme Court agreed. The Court noted that “the fortuity implied by reference to accident or exposure is not what is commonly meant by a failure of workmanship.” Therefore, to constitute an occurrence under the CGL policies, there must have been “damage to property other than the work product – in this case, the chimneys.” The Court further found that the carbon monoxide leak did not “damage” any other property, because it only resulted in loss of use of the chimneys themselves.
In High Country, however, the Court found there was an occurrence where a defective roof installed by the insured allowed water to seep through, damaging the walls. Some, citing this decision, had counted New Hampshire as one of the few states that contemplate coverage for faulty work under CGL policies (despite earlier holdings to the contrary). Although the Court in Concord did not explicitly address High Country, the Concord decision arguably confines the holding of High Country to a situation where there was damage to property other than the insured’s work product.