Progressive Damage Construction Defect Cases
CONSTRUCTION LAW Allocation of Risk Among Multiple Progressive Damage Insurers Construction By R. Michael Ethridge Defect Cases and Katherine W. Sullivan The landscape Deciding whether a construction defect claim is covered surrounding these issues by a contractor’s commercial general liability (CGL) pol- is constantly changing icy is always a sticky proposition. Among the most vexing and never boring. problems for coverage and defense counsel alike, in a case involving a progressive injury, is which Hypothetical Scenario insurance policy is implicated. Unlike the A general contractor builds a multimil- typical personal injury case that would lion dollar oceanfront home in 2005. At implicate only one CGL policy because the time of construction the general con- the injury would “occur” during one pol- tractor is insured under a standard CGL icy period, a progressive damage construc- policy, ISO Form CG 00 01 10 01. The anni- tion defect case creates a unique situation, versary date of the policy is January 1. Con- and depending on the state, multiple pol- struction began on June 1, 2005, and was icies can be triggered. Courts around the completed on April 1, 2006, with the certif- country have struggled with how to allo- icate of occupancy issued on May 1, 2006. cate damages among multiple insurers in Because of the collapse of the real estate these progressive damage cases. market, the general contractor goes out of This article will briefly attempt to business on December 31, 2008. address the different approaches that the In 2007, the homeowners notice water states have used to determine coverage coming into their home around windows triggers in construction cases as well as and doors and also begin to experience a the methods used by the states to allocate serious problem with mold growth on the risks among multiple insurers.
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