In the recent decision of Korte & Luitjohan Contractors Inc. v. Erie Insurance Exchange, the Fifth District Appellate Court of Illinois reaffirmed that, under Illinois law: (1) construction defects generally do not trigger coverage under commercial general liability insurance policies; (2) such policies generally do not cover the cost to repair construction defects or economic losses resulting from construction defects; and (3) parol evidence is irrelevant to the ... Keep Reading »
Construction/Builder's Risk
South Carolina Federal Court Finds No Coverage for Faulty Workmanship Damages Discovered Years After Occurrence-Based Policy Expiration
Potential Six-Year Delay in Notice of Flood and Mold Damage “Substantially Prejudiced” Insurer In Atain Specialty Insurance Company v. Carolina Professional Builders, LLC et al., 2:18-cv-2352-BHH (D.S.C. Oct. 2, 2020), a federal judge in South Carolina granted summary judgment to an insurer after finding that the record clearly supported that although flood and mold damages may have occurred during the policy period, that damage was distinct from the damage being ... Keep Reading »
Fifth Circuit Holds That Ensuing Loss Provision of Builders’ Risk Policy Requires Two Separate Events to Qualify for the Construction Exclusion Carve-Out
In Balfour Beatty Construction, LLC v. Liberty Mutual Fire Insurance Company, No. 19-20216 (August 3, 2020), the Fifth Circuit determined that Liberty Mutual’s policy does not cover a construction company’s claim for window damage to a skyscraper caused by a subcontractor’s welding because the policyholder failed to show the damage resulted from a covered peril. The case turned on the court’s interpretation of the policy’s construction exclusion, which included an ... Keep Reading »
South Carolina Supreme Court’s Quiet Erosion of Insurers’ Attorney-Client Privilege Rights
One decision that flew under the radar in 2019 continues the recent trend of courts to dispense, under among other things the previously discussed “at-issue” waiver doctrine, with insurers’ fundamental rights to confidentiality with respect to legal advice. In the June 2019 decision In re Mt. Hawley Insurance Co., No. 2018-001170 (S.C. June 12, 2019), South Carolina directed, in response to a certified question from the Fourth Circuit Court of Appeals, the circumstances ... Keep Reading »
Connecticut Supreme Court Fortifies Crumbling Foundation Claim Denials in Trio of Insurer Victories
A year ago, we wrote about a rapidly emerging area of insurance litigation in Connecticut: crumbling foundations. As a quick recap, tens of thousands of homes in northeastern Connecticut built over a span of more than 30 years may have been constructed with defective concrete that causes basement walls to prematurely deteriorate and eventually become structurally unsound. The Crumbling Foundation Crisis The problem, known as alkali-silica reaction (ASR), is the result ... Keep Reading »
New York’s Highest Court Holds Untimely Disclosure Is Not an Untimely Disclaimer
The defendant, Preferred Contractors Insurance Company Risk Retention Group LLC (PCIC), is a risk retention group charted in Montana and doing business in New York. PCIC issued a CGL policy naming defendant Nadkos Inc. as an additional insured for liability related to the ongoing operations of the subcontractor and other members of the risk retention group. PCIC disclaimed coverage for Nadkos for an underlying personal injury action by an employee of Nadkos' ... Keep Reading »
EDNY “Teas” It Up On Additional Insured, Finds Insurer May Withdraw Defense and Recoup Defense Costs
Given the broad duty to defend rules in most jurisdictions, liability insurers often find that they must — or perhaps should out of an abundance of caution — defend an insured against a claim that in all likelihood will not implicate the duty to indemnify, such as when extrinsic evidence strongly suggests that an exclusion will apply. In these situations, insurers in many states are permitted to offer a defense under a reservation of rights to withdraw and seek ... Keep Reading »
Break Out Your Crystal Ball: New York’s First Department Relies on Policy’s Mitigation Provision as Support for Allegation That Consequential Damages Were Foreseeable
An insured sought coverage under its commercial property insurance policy for property damage incurred after construction work was performed in an adjoining building. Contending the insurer’s “investigatory process has taken so long and become so attenuated that the structural damage to the building has worsened,” the insured brought suit for breach of contract for failure to pay a covered loss under its insurance policy and breach of the implied covenant of good faith ... Keep Reading »
Look Beneath the Surface: No Coverage for DC Row House Collapse Under Builder’s Risk Policy
The interpretation of a property insurance policy may seem like a dull endeavor, but courts sometimes face fundamental questions about what words mean, or how we conceptualize cause and effect. In Taja Investments LLC v. Peerless Ins. Co., No. 16-1854 (4th Cir. Oct. 11, 2017), the Fourth Circuit Court of Appeals confronted both issues to determine that two exclusions in a builder’s risk policy applied to bar coverage for the collapse of a row house under renovation in ... Keep Reading »
Conflict Resolution: Illinois Appellate Court Finds No Conflict in Defending Two Insureds, and No Duty of Primary to Excess Insurer to Settle Case
When an insurer defends its insured under a liability policy, the insurer has a duty to act in good faith to the insured in responding to settlement offers. In Illinois Emcasco Insurance Co. v. Nationwide Mutual Insurance Co., No. 1-14-0928 (Ill. Ct. App. Aug. 3, 2015), the Illinois Court of Appeals determined that, where a primary insurer and excess insurer provide coverage to a common insured, the primary does not owe the same duty to the excess – at least where the ... Keep Reading »