Home Page The Publication The Editor Contact Information Insurance Key issues Book Subscribe
Vol.12 - Issue 7

September 6, 2023

Addressing Construction Defect Coverage: Well, That Was Easy
As readers of Coverage Opinions know, the number of decisions addressing coverage for construction defects is colossal.  Between the “occurrence” issue and what’s “property damage” and then the various business risk exclusions, numerous opportunities for disputes exist.

But insurer Maxum found a way to make it simple, even in a commercial general liability policy issued to a builder: its policy contained a breach of contract exclusion.  I don’t mean an exclusion for contractually assumed liabilities with an exception for “insured contracts.”  I mean a breach of contract exclusion, period.

The court in Allen v. Southwest Builders, No. 2022 CA 1344 (Ct. App. La. Aug. 24, 2023) concluded that the breach of contract exclusion applied to claims for breach of contract, implied warranty of good workmanship and other negligence carrying out an agreed-upon construction contract.  The court held: “[T]he facts of this case make it clear that all of the plaintiffs’ allegations against Maxum are based on Southwest’s alleged breach of its contractual duty to timely and properly construct the plaintiffs’ home. Thus, all of the plaintiffs’ property damage claims against Maxum are clearly precluded from coverage since they all arise from a breach of contract claim.”  Well that was easy.






Website by Balderrama Design Copyright Randy Maniloff All Rights Reserved