As a contractor you need to appreciate the “your work” exclusion in your CGL policy. It is an exclusion that will absolutely come into play if there is a latent construction defect claim asserted against you. You also need to appreciate the subcontractor exception to the “your work” exclusion in your CGL policy. This is a must-have exception, particularly if you subcontract out portions of your scope of work. This exception carves out from this exclusion “your work” performed by subcontractors.
Without this exception, all of your work is excluded as the contractor in this post-completion water intrusion case found out when the court held its CGL insurer had NO duty to defend or indemnify it from the owner’s construction defect claims. This is a double ouch!!! Not having insurance coverage to defend you in an expensive construction defect case is one thing. It is another knowing that your insurer has no obligation to pay for any property damage because there is no coverage. Do the smart thing — consult your insurance broker regarding the “your work” exclusion and the subcontractor exception to this exclusion. If your policy does not contain the subcontractor exception, consider the harsh implications of what your policy will and will not cover in a latent construction defect case.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.