You may be right about that. On the other hand, a “prudent” person ought to know they can’t buy insurance protection against being a bad contractor. And since this guy toppled his customer’s house, he would seem to fit that description!
Pardon my ignorance (I work in professional lines), but isn’t a builders risk policy to cover exposures during building, not during improvements? Would that have been an applicable option here?
On the form under “property not covered” it states, “Existing building or structure to which an addition, alteration, improvement, or repair is being made, UNLESS SPECIFICALLY ENDORSED.”
From the article, I didn’t specifically read that it was faulty workmanship but that the actual property he was working on was excluded. Sounds like the agent should have offered his insured “Voluntary Property Damage” coverage or removal of the “care, custody, and control” exclusion in the GL, which would have allowed coverage up to the limit purchased for property the contractor was working on.
Builders risk covers property during construction. Say a hotel being framed burns down during construction.
The “your work” exclusion L of CG 00 01 01/04 applies to the products/completed operations hazard. In other words, it excludes damage to your work, caused by your work, after such work is completed.
One can infer by the indirect details of this article that the house rolled over AFTER the piers were installed (and not during the process of the home being lifted). As such, the Your Work exclusion should be applied.
I think the subcontractor exception to exclusion L Your Work is more interesting. What does everyone think about form CG 22 94 (which eliminates the subcontractor exception)? Should it be widely used by carriers in the marketplace?
Also a fun fact is that the exception to exclusion L introduces an undefined term “subcontractor” into the policy, creating further confusion and opportunity for interpretation by various state courts (which generally will err on the side of inferring coverage when encountering ambiguity).
I disagree. I think the loss occured DURING construction. Because the following statement in the article.
“The Hanover won’t have to pay $26,000 in claims on behalf of a Connecticut contractor who accidentally knocked over the house he was working on…”
You are correct that in a products completed situation the damage is excluded under exclusion L, but as it would also be excluded under J (5) & (6) as well for premises operations.
So…IF…we infer that it was during construction, a builders risk would be the appropriate policy provided the proper endorsement was purchased.
As far as the CGL goes there would only be coverage for damage to “other than the insured’s work” or “that particular part” on which he’s working (i.e. the house fell on a neighbor’s car).
It is possible to get a builders risk during renovations/additions to a home.
Generally speaking, it’s advisable to find out the extent of the renovations, especially in cases like this where they were raising the home, so you can tell the underwriters exactly what is going to be done.
If they write in your area, I’d check with Tapco Underwriters.
so interesting that this article appeared yesterday – i attended a CPCU seminar addressing construction defects yesterday and this circumstance was the subject of conversation. The exclusion that applies is j. 5. which states “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. Since the entire house was jacked up to install new piers, the entire house was the “part” the contractor was working on.
With regard to CG2294 – as an agent you should be fighting to remove this exclusion from your client’s policy – not doing so is an E&O.
oh, and yes a Builders Risk should have been purchased including coverage for the existing structure. Would not have been cheap, but that is where the coverage belongs…
Interesting thread. Seems most like the care custody control exclusion. It’s my understanding that coverage is not available to pay, if you screw up, in “the course of your normal business operations”. So no coverage for a bad haircut but yes if barber cuts your ear. No coverage for a cleaning lady who moves and breaks a figurine while dusting…CCC exclusion. Anyone know- Builder’s Risk? I think yes for addition…not for remodel right?
GEEK:
Thanks for the answer- so it’s not CCC…..what about the other exclusion I am thinking about….something about exclusions in your “normal operations”…..ever hear about that one?
I would advise the contractor to sue his insurance agent. This a prime reason insurance agents shouldn’t sell what they don’t know.
You may be right about that. On the other hand, a “prudent” person ought to know they can’t buy insurance protection against being a bad contractor. And since this guy toppled his customer’s house, he would seem to fit that description!
No E&O here Duggan. Faulty workmanship is never covered. Unskilled Contractors are not an insurance agents fault.
Next?
…don’t build your house without one!
I agree
Pardon my ignorance (I work in professional lines), but isn’t a builders risk policy to cover exposures during building, not during improvements? Would that have been an applicable option here?
On the form under “property not covered” it states, “Existing building or structure to which an addition, alteration, improvement, or repair is being made, UNLESS SPECIFICALLY ENDORSED.”
From the article, I didn’t specifically read that it was faulty workmanship but that the actual property he was working on was excluded. Sounds like the agent should have offered his insured “Voluntary Property Damage” coverage or removal of the “care, custody, and control” exclusion in the GL, which would have allowed coverage up to the limit purchased for property the contractor was working on.
Apples and oranges!
Builders risk covers property during construction. Say a hotel being framed burns down during construction.
The “your work” exclusion L of CG 00 01 01/04 applies to the products/completed operations hazard. In other words, it excludes damage to your work, caused by your work, after such work is completed.
One can infer by the indirect details of this article that the house rolled over AFTER the piers were installed (and not during the process of the home being lifted). As such, the Your Work exclusion should be applied.
I think the subcontractor exception to exclusion L Your Work is more interesting. What does everyone think about form CG 22 94 (which eliminates the subcontractor exception)? Should it be widely used by carriers in the marketplace?
Also a fun fact is that the exception to exclusion L introduces an undefined term “subcontractor” into the policy, creating further confusion and opportunity for interpretation by various state courts (which generally will err on the side of inferring coverage when encountering ambiguity).
Matt:
I disagree. I think the loss occured DURING construction. Because the following statement in the article.
“The Hanover won’t have to pay $26,000 in claims on behalf of a Connecticut contractor who accidentally knocked over the house he was working on…”
You are correct that in a products completed situation the damage is excluded under exclusion L, but as it would also be excluded under J (5) & (6) as well for premises operations.
So…IF…we infer that it was during construction, a builders risk would be the appropriate policy provided the proper endorsement was purchased.
As far as the CGL goes there would only be coverage for damage to “other than the insured’s work” or “that particular part” on which he’s working (i.e. the house fell on a neighbor’s car).
It is possible to get a builders risk during renovations/additions to a home.
Generally speaking, it’s advisable to find out the extent of the renovations, especially in cases like this where they were raising the home, so you can tell the underwriters exactly what is going to be done.
If they write in your area, I’d check with Tapco Underwriters.
so interesting that this article appeared yesterday – i attended a CPCU seminar addressing construction defects yesterday and this circumstance was the subject of conversation. The exclusion that applies is j. 5. which states “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. Since the entire house was jacked up to install new piers, the entire house was the “part” the contractor was working on.
With regard to CG2294 – as an agent you should be fighting to remove this exclusion from your client’s policy – not doing so is an E&O.
oh, and yes a Builders Risk should have been purchased including coverage for the existing structure. Would not have been cheap, but that is where the coverage belongs…
I cannot see from the article that a builders’ risk policy is involved. Looks like just a CGL. Am I not understanding something?
the Builders Risk was brought up earlier in posts
Interesting thread. Seems most like the care custody control exclusion. It’s my understanding that coverage is not available to pay, if you screw up, in “the course of your normal business operations”. So no coverage for a bad haircut but yes if barber cuts your ear. No coverage for a cleaning lady who moves and breaks a figurine while dusting…CCC exclusion. Anyone know- Builder’s Risk? I think yes for addition…not for remodel right?
read the CCC exclusion – refers to personal property. yes, you can get coverage for the existing structure but it is costly.
GEEK:
Thanks for the answer- so it’s not CCC…..what about the other exclusion I am thinking about….something about exclusions in your “normal operations”…..ever hear about that one?
Boston Richie – it is the “your work” exclusion – the entire house was the contractors “work”…