When it comes to construction defect litigation, the way the complaint is drafted is very, very important. The complaint is what triggers a liability insurance carrier, such as a CGL carrier’s, duty to defend. The key is to maximize insurance coverage no matter who you represent. If you are a general contractor sued by an owner, you want the owner to draft the complaint that not only triggers your CGL carrier to provide you a duty to defend, but also your subcontractor’s CGL carriers since you will be looking to your subcontractor for indemnification and, probably, defense as an additional insured under their CGL policies.
A recent opinion illustrates what could happen if the complaint is not carefully drafted to trigger an insurer’s duty to defend. In this case, an owner sued a general contractor for roofing defects. The contractor tendered the defense to its roofer’s CGL carrier, and the CGL carrier refused to defend or indemnify the contractor. The contractor then sued the roofer’s CGL carrier for a defense and coverage arguing it was an additional insured under the roofer’s policy. The problem, however, was that the complaint against the contractor did not include allegations that would trigger coverage. Specifically, the complaint alleged that the roof was defective and needed to be replaced, but the complaint never alleged that the defective roof caused resulting damage, such as water damage. Remember, a CGL policy is not designed to cover faulty workmanship. Rather, it is designed to cover damage resulting from faulty workmanship. Without an allegation that the defective roof caused resulting damage, there were no allegations that triggered the roofer’s CGL policy’s obligation to defend or indemnify the contractor. The court explained that the complaint “does not allege that the roofs had to be replaced and their failure caused damage to other parts of the building (or anything along those lines), as needed to assert a claim for property damage and thereby establish a duty to defend.” Core Construction Services Southeast, Inc. v. Crum & Foster Insurance Co., 2015 WL 8043940, *3 (M.D. Fla. 2015).
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