Understanding the (j)(5) and (j)(6) Exclusions in Your CGL Policy

If you are a contractor and have a claim that arises during construction you are aware of the (j)(5) and (j)(6) exclusions in your CGL policy (to bar coverage) that exclude:

(j)(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations; or

(j)(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

Recently, a court explained that the (j)(5) exclusion applies to exclude coverage to damage to “that particular part of real property on which you or any contractor or subcontractors working directly on your behalf are performing operations” at the time / moment of the accident. The court further explained that the (j)(6) exclusion applies to “that particular part of real property” if you incorrectly performed work (at any time) on that part of real property and the incorrectly performed work caused or contributed to damage to that part.

For example, a contractor performed welding operations to a tower. After the welding operations a fire caused damage that damaged aspects of the tower. The court explained the (j)(5) exclusion did not apply because the damage did not occur at the time / moment the contractor was performing operations. The court further explained that the (j)(6) exclusion would apply if the contractor incorrectly performed its work on the tower and the incorrectly performed work caused or contributed to the damage to the tower.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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