Construction Defect
Resource Guide
4th Edition, 2015
1 Introduction
2 Is there an occurrence?
21 Is there property damage?
39 Coverage trigger
59 Allocation of loss
73 Anti–indemnification statutes, right to repair/cure,
and statutes of limitations, and statutes of repose
Table of Contents
Edited by:
Andrew Sanchez
Munich Reinsurance America, Inc.
www.munichreamerica.com
Special thanks to:
William E. McGrath, Jr.
Smith, Stratton, Wise,
Heher & Brennan, LLP
2 Research Way
Princeton, New Jersey 08540
Tel.: +1 609 924-6000
Fax: +1 609 987-6651
www.smithstratton.com
Munich Re Construction Defect Resource Guide 1
Introduction
Munich Re is pleased to provide this guide
that may be helpful in understanding certain
key issues impacting construction defect
claims. This review consists of a survey of
case law and statutes that aid in the analysis
of insurance coverage issues impacting
construction defect claims. This booklet is
not intended to be an exhaustive survey of
each and every case or statute that may
apply in a given claim; rather, it is oered as
an introduction and quick start to detailed
review and research.
In order to make the guide useful, we have
focused the fifty state surveys of case law on
the issues that arise in nearly every claim:
whether the alleged construction defect
constitutes an occurrence; does property
damage exist; the applicable trigger of
coverage; and the allocation of loss, perhaps
over multiple years and policies. Please note
that there are many other insurance
coverage issues that arise, but the issues we
have surveyed appear in virtually all
construction defect claims.
Because of the number, scope, and nature of
exclusions contained in liability policies that
may otherwise respond to construction
defect claims, it is not feasible to concisely
summarize the universe of such exclusions,
much less how each has been treated in
state and federal case law. We, therefore, do
not endeavor to address in this guide the
case law concerning the application of such
exclusions. Certain exclusions are commonly
found, however, and should be reviewed in
appropriate circumstances. Among the more
frequently addressed exclusions are the
so-called “business risk” exclusions, which
include the “damage to property”, “damage
to your property”, and “damage to your work”
exclusions. Other potentially applicable
exclusions concern prior work, contractual
liability, EIFS, mold, owned property, earth
movement, and known or continuing injury
or damage.
Cases are grouped by state and contain
the citation, an abbreviated factual summary,
and the court’s finding. As many of the cases
may be preliminary or still subject to appeal,
further review of any development in these
cases is required. Additionally, since these
reviews provide only a brief summation, a
complete reading and analysis of the cases
is necessary. You will doubtless notice a lack
of consistent judicial treatment of the issues
addressed in this guide, even within the
same state. The subtleties of each claim,
dierent facts, and precise policy language
all contribute to the disparity. In some cases,
the decisions are simply not reconcilable.
Separate from the case law summaries,
we also include a chart outlining legislation
enacted by various states concerning the
right to repair/cure, statutes of limitations
and repose, and anti-indemnity statutes,
as pertinent to the institution of a
construction defect lawsuit. Legislative
action on construction defect claims is an
active area in the law, and should always be
reviewed in addition to case law.
The summaries and descriptions contained
in this booklet do not address, nor are they
intended to address, all of the actual terms,
conditions, exclusions, or limitations found
in an insurance policy. We certainly are not
and do not intend to provide legal advice.
Finally, we should note that our focus on
the issues discussed in this booklet does
not reflect the claims perspective, approach,
or positions of Munich Re, its ailiates or
subsidiaries. Rather, it is simply oered as
an aid to your independent analysis
and research.
2 Munich Re Construction Defect Resource Guide
Is there an occurrence?
Despite what may be similar policy language and fact patterns involved in these claims, the
interpretation of what constitutes an occurrence in the context of a construction defect claim
often varies widely from one jurisdiction to the next. An analysis of coverage in a construction
defect claim should focus on determining whether the underlying claim or suit comes within
the scope of the insuring agreement of the policy including whether the injury or property
damage was caused by a policy-defined occurrence.
The following is a summary of selected cases addressing construction defect as
an occurrence.
Munich Re Construction Defect Resource Guide 3
Is there an occurrence?
State Citation Facts Finding Comments
Alabama Pennsylvania Nat’l. Mut.
Cas. Ins. Co. v. Snider,
2015 U.S. App. LEXIS
5550 (11th Cir. 2015)
Homeowners asserted
several claims against
developer, including cost
of completing unfinished
work, diminution in value,
and repairing faulty work.
No occurrence No occurrence where
damages largely caused
by contractor abandoning
job and where homeowner
failed to prove covered
property damage.
Pennsylvania Nat’l. Mut.
Cas. Ins. Co. v. Snider, 996
F. Supp. 2d 1173 (M.D. Ala.
2014) a’d 2015 U.S. App.
LEXIS 5550 (11th Cir.
2015)
Homeowners claim
against their own insurer
for construction defects
couched as contract and
warranty claims.
No occurrence Breach of contract claims
are essentially the
opposite of an accident.
FCCI Ins. Co. v. Capstone
Process Sys., LLC, 49 F.
Supp. 3d 995 (N.D. Ala.
2014)
Contractor’s work on
agricultural vessel failed.
No occurrence Faulty workmanship itself
is not an occurrence.
Owners Ins. Co. v. Jim
Carr Homebuilder, LLC,
157 So. 3d 148 (Ala. 2014)
Contractor asserted claim
for coverage for
arbitration award
obtained by homeowners
for various defects.
Occurrence While repair or
replacement of faulty
workmanship is not
covered, resulting damage
to other work of insured
contractor may still
constitute an occurrence.
Berry v. S.C. Ins. Co., 495
So. 2d 511 (Ala. 1985)
Contractor sued for faulty
construction of a home
addition.
No occurrence Damage related to the
work done pursuant to
contract is not an
accident.
U.S. Fid. & Guar. Co. v.
Warwick Dev. Co., 446 So.
2d 1021 (Ala. 1984)
Home purchasers sued
builder for unworkmanlike
construction and
misrepresentations.
No occurrence Reliance upon
misrepresentations does
not constitute an
occurrence.
Moss v. Champion Ins.
Co., 442 So. 2d 26 (Ala.
1983)
Rain damaged attic and
ceilings when roof was
left uncovered during
construction.
Occurrence Occurrence under the
policy, as insured did not
intend damage.
Alaska Fejes v. Alaska Ins. Co.,
984 P.2d 519 (Alaska
1999)
Contractor sued for faulty
work on curtain drain
leading to damaged septic
system.
Occurrence Drain failure was an
accident, which was
neither expected nor
intentional.
Arizona Quanta Indem. Co. v.
Amberwood Dev. Inc.,
2014 U.S. Dist. LEXIS
40211 (D. Az. 2014)
Multiple actions against
developers alleged
foundation, excavation,
and construction defects.
Occurrence Allegations of faulty
workmanship and soil
movement constitute an
occurrence.
4 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Arizona Am. Family Mut. Ins. Co. v.
Spectre W. Builders Corp.,
2011 U.S. Dist. LEXIS
11328 (D. Ariz. 2011)
Homeowners’ association
sued contractor, alleging
faulty workmanship, cost
of repair, and resulting
water damage.
Occurrence
and no occurrence
Physical damage caused
by faulty workmanship
can constitute an
occurrence.
Lennar Corp. v. Auto-
Owners Ins. Co., 151 P.3d
538 (Ariz. Ct. App. 2007)
Developer sued by
homeowner for cracks,
baseboard separation,
and sticking doors.
No occurrence Continued exposure
to faulty construction
leading to property
damage constitutes
an occurrence.
U.S. Fid. & Guar. Corp. v.
Advance Roofing &
Supply Co., 788 P.2d 1227
(Ariz. Ct. App. 1990)
Roofing contractor sued
for faulty work on roofs.
No occurrence Faulty workmanship alone
does not constitute an
occurrence.
Arkansas
1
J-McDaniel Constr. Co. v.
Mid-Continent Cas. Co.,
761 F.3d 916 (8th Cir.
2014)
Contractor sued for
breach of contract arising
from defective
construction of home.
No occurrence Defective workmanship
standing alone—resulting
in damages only to the
work product itself—is not
an occurrence.
Lexicon, Inc. v. ACE Am.
Ins. Co., 634 F. 3d 423
(8th Cir. 2010)
Contractor sued for
defective fabrication of six
silos, leading to collapse,
damaged silos and
equipment.
Occurrence
and no occurrence
Damages arising solely
from faulty workmanship
does not constitute
occurrence; coverage
exists for other damage.
Allstate Indem. Co. v.
Bobbitt, 2010 U.S. Dist.
LEXIS 135190 (E.D. Ark.
2010)
Home purchasers sued
building contractor,
alleging defective siding
and construction work
resulted in exterior wall
and stucco cracks.
No occurrence Alleged defective siding
and construction work
is not an accident and,
hence, not an occurrence.
Essex Ins. Co. v. Holder,
261 S.W. 3d 456 (Ark.
2008)
Homebuilder sued for
construction delays and
defective construction.
No occurrence Faulty workmanship is not
an accident; instead it is a
foreseeable occurrence
for which risk
performance bonds exist.
California Ameron Intl. Corp. v. Am.
Home Assurance Co.,
2011 U.S. Dist. LEXIS
61486 (C.D. Cal. 2011)
Contractor sued for
supplying defective
concrete for highway
project, leading to project
delays and failed drill
shafts.
Occurrence Unintentional supplying
of defective products
constitutes occurrence, if
contractor did not
intentionally supply faulty
product.
Allstate Ins. Co. v. Morgan,
806 F. Supp. 1460 (N.D.
Cal. 1992)
Home purchasers sued
seller for not disclosing
certain facts.
No occurrence Misrepresentation does
not constitute an accident
leading to property
damage.
1
Arkansas legislature passed a law in 2011 defining “occurrence” more broadly than the listed decisions, but has not been applied retroactively.
See A.C.A. § 23-79-155 (2011)
Munich Re Construction Defect Resource Guide 5
Is there an occurrence?
State Citation Facts Finding Comments
Colorado TCD, Inc. v. Am. Family
Mut. Ins. Co., 296 P.3d
255 (Colo. Ct. App. 2012)
Contractor sued for
faulty roof installation.
No occurrence Poor workmanship alone
does not constitute an
occurrence.
United Fire & Cas. Co. v.
Boulder Plaza Residential,
LLC, 2010 U.S. Dist.
LEXIS 14257 (D. Colo.
2010), a’d, 633 F.3d 951
(10th Cir. 2011)
Condominium owner
sought coverage for
improper installation of,
and resulting damage to,
wood floors.
No occurrence Damages arising solely
from faulty workmanship
are not considered as
resulting from an
occurrence.
Greystone Constr., Inc. v.
Natl. Fire & Marine Ins.
Co., 661 F. 3d 1272 (10th
Cir. 2011), modified, 2011
U.S. App. LEXIS 26082
(10th Cir.)
Contractor sued for
defective construction of
foundation.
Occurrence Damage to other property
caused by poor
workmanship is neither
expected nor intended.
Connecticut Travelers Cas. and Sur.
Co. of Am. v. Netherlands
Ins. Co., 95 A.3d 1031
(Conn. 2014)
Insurer sought
contribution from other
insurers for defense of
contractor in construction
defect litigation.
Occurrence Continuing damage
resulting from water
intrusion is an occurrence
in each year of property
damage.
Capstone Bldg. Corp. v.
Am. Motorists Ins. Co., 67
A.3d 961 (Conn. 2013)
Contractor sued for
defective construction of
university housing,
leading to water damage
and structural problems.
Occurrence Unintended defective
work that damaged
nondefective property
could constitute an
occurrence.
Peterbilt of Conn., Inc. v.
First Fin. Ins. Co., 2011
U.S. Dist. LEXIS 106740
(D. Conn. 2011)
Building owner sued
roofing contractor,
alleging faulty work
caused roof to leak.
No occurrence Damages awarded for
breach of contract and
replacement of roof due to
faulty workmanship do
not constitute damages
caused by an occurrence.
Philbin Bros., LLC v.
Hartford Fire Ins. Co.,
2008 Conn. Super. LEXIS
3301 (Conn. Super. 2008)
Homebuyers sued builder,
asserting faulty
construction and failure to
warn of related risks.
No occurrence CGL policy does not cover
insured’s work itself; it
insures against
negligence from
performance of work.
Delaware Westfield Ins. Co., Inc. v.
Miranda & Hardt Contr. &
Bldg. Servs., LLC, 2015
Del. Super. LEXIS 160
(Del. Super. 2015)
Defendant-contractor
sued for various defects in
home construction.
No occurrence No occurrence or duty to
defend where allegations
are of defective
workmanship and
property damage caused
by a third-party.
Florida Auto-Owners Ins. Co. v.
Pozzi Window Co., 984
So. 2d 1241 (Fla. 2008)
Contractor sued for faulty
installation of windows,
leading to water damage.
Occurrence Defective installation of
windows constitutes an
occurrence.
U.S. Fire Ins. Co. v. J.S.U.B.,
Inc., 979 So. 2d 871 (Fla.
2007)
Subcontractor’s use of
poor soil and faulty work
led to damaged
foundation and drywall.
Occurrence Faulty workmanship not
expected by the insured
constitutes an occurrence.
6 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Florida Rolyn Cos., Inc. v. R & J
Sales of Tex., Inc. 671 F.
Supp. 2d 1314 (S.D. Fla.
2007)
Subcontractor hired
to repair roof. Insured
alleged that roofing
contractor’s faulty work
resulted in further water
damage to the building.
Occurrence As subcontractor’s faulty
work was neither
expected nor intended
from the standpoint of
insured, faulty work was
an occurrence.
Georgia Taylor Morrison Services
Inc. v. HDI-Gerling
America Insurance Co.,
746 S.E. 2d 587 (Ga. 2013)
Homeowner sued for
defective construction
of homes, leading to
water intrusion and
cracks in foundation.
Occurrence Damage to property other
than the insured’s
completed work is not
required to establish an
occurrence.
Am. Empire Surplus Lines
Ins. Co. v. Hathaway Dev.
Co., Inc., 707 S.E. 2d 369
(Ga. 2011)
General contractor sued
plumbing subcontractor
seeking recovery of
repair costs caused by
faulty workmanship.
Occurrence Faulty workmanship
constitutes an occurrence
where it causes
unforeseen or unexpected
damage to other property.
Hawaii Nautilus Ins. Co. v.
Waikoloa Enters., Inc.,
2012 U.S. Dist. LEXIS
76360 (D. Haw.), a’d,
2012 U.S. Dist. LEXIS
77206 (D. Haw. 2012)
Apartment association
sued tile subcontractor,
alleging inappropriate
materials caused cracked
tiles and damage to lanai’s
waterproofing.
No occurrence Abitrators found insured
deliberately failed to
waterproof the lanais, and
such intentional actions
do not constitute an
occurrence.
Group Builders, Inc. v.
Admiral Ins. Co., 231 P.3d
67 (Haw. Ct. App. 2010)
Contractor sued for
faulty work leading to
mold and hotel closure.
No occurrence Construction defects
do not constitute an
occurrence and breach
of contract and tort-based
claims are based on
defective work.
Burlington Ins. Co. v.
Oceanic Design & Constr.,
Inc., 383 F.3d 940 (9th Cir.
2004)
Homeowner asserted
breach of contract and
negligence claims for
faulty construction of
foundation, causing
settling and related
damage.
No occurrence Breach of contract
claims, even with related
negligence claims, does
not constitute an
occurrence.
Illinois Nautilus Ins. Co. v. Board
of Directors of Regal Lofts
Condominium Ass’n., 764
F.3d 726 (7th Cir. 2014)
Developer sued for
faulty workmanship
in condominium
construction.
No occurrence Damages that are the
ordinary consequences of
faulty workmanship do
not constitute an
occurrence.
Design Concrete
Foundations, Inc. v. Erie
Ins. Prop. & Cas. Co., 2014
Ill. App. Unpub. LEXIS (Ill.
App. Ct. 2014)
Homeowners sued
contractor for faulty
work in constructing
foundation.
No occurrence Repair of defectively-
constructed foundation
was the natural
consequence of faulty
workmanship; hence
there is no occurrence.
Munich Re Construction Defect Resource Guide 7
Is there an occurrence?
State Citation Facts Finding Comments
Illinois Nautilus Ins. Co. v. JDL
Dev., IX, LLC, 2012 U.S.
Dist. LEXIS 57294 (N.D.
Ill. 2012)
Condominium association
sued developer and
contractors, alleging
faulty workmanship
caused damage to
windows and doors
of building, terraces,
flooring, and door sills.
No occurrence Damage is to materials
furnished by the insured;
no occurrence is alleged.
Milwaukee Mut. Ins. Co. v.
J.P. Larsen, Inc., 956 N.E.
2d 524 (Ill. App. Ct. 2011)
Contractors sued for
installing leaking
windows and remedial
work.
Occurrence The faulty work caused
damage beyond work
performed by
subcontractor.
Country Mut. Ins. Co. v.
Carr, 867 N.E. 2d 1157 (Ill.
App. Ct. 2007)
Contractor sued for
faulty backfill operations,
causing damage to
basement walls.
Occurrence Insured did not expect nor
intend for damage to the
basement wall.
Indiana Sheehan Constr. Co., Inc.
v. Cont’l Cas. Co., 938 N.E.
2d 685 (Ind. 2010)
Contractor sued for faulty
work leading to water
leaks in the home.
Occurrence Faulty workmanship
constitutes an occurrence
if unexpected and not
foreseeable.
Trinity Homes, LLC v.
Ohio Cas. Ins. Co., 629 F.
3d 653 (7th Cir. 2010)
Contractor sued for faulty
work at home allowing
water to enter property
and cause damage.
Occurrence Damage to a home from
defective work constitutes
occurrence unless such
work was intentionally
faulty.
Iowa Liberty Mut. Ins. Co. v.
Pella Corp., 650 F.3d 1161
(8th Cir. 2011)
Window manufacturer
sued for defective
product, resulting in
damage to products and
building.
No occurrence Knowledge of defect
establishes that faulty
work was not an
unexpected event.
W.C. Stewart Constr., Inc.
v. Cincinnati Inc. Co.,
2009 Iowa App. LEXIS
273 (Iowa Ct. App. 2009),
a’d, 770 N.W.2d 850
(Iowa Ct. App. 2009)
Insured contractor
sought coverage under
CGL policy for claims
asserted by developer for
subcontractor’s defective
grading resulting in wall
cracks and building
movement.
No occurrence Because damages sought
were to work done by
insured, no occurrence.
Pursell Constr., Inc. v.
Hawkeye- Sec. Ins. Co.,
596 N.W.2d 67 (Iowa
1999)
Contractor hired to build
homes above flood plain.
Houses improperly
constructed in flood plain
requiring owner to raise
the level of the houses.
No occurrence Contractor’s failure to
build the houses above
the flood plain constituted
defective workmanship.
Yegge v. Integrity Mut. Ins.
Co., 534 N.W.2d 100 (Iowa
1995)
Contractor sued for failing
to complete home
construction.
No occurrence The alleged failures giving
rise to the homeowners’
claims did not involve
accidental conduct.
8 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Kansas Lee Builders, Inc. v. Farm
Bureau Mut. Ins. Co., 137
P.3d 486 (Kan. 2006)
Homebuilder sued after
defective construction led
to water leaks and
damaged walls.
Occurrence Faulty materials and
workmanship caused
continuous exposure of
home to moisture that
was unforeseen and
unintended.
American States Ins. Co.
v. Powers, 262 F.Supp. 2d
1245 (D. Kan. 2003)
Building owners alleged
that contractor failed to
construct building
according to the agreed
specifications, within the
time agreed upon, to meet
building codes and to stay
within the contract price.
Occurrence Faulty or negligent
workmanship can
constitute an occurrence
so long as the insured did
not intend the damage to
occur.
Fidelity & Deposit Co. of
Md. v. Hartford Cas. Ins.
Co., 189 F. Supp. 2d 1212
(D. Kan. 2002)
Faulty work on school
project included
deteriorated walls,
cracked joints and slabs
and improper drain lines.
Occurrence Damages as a result of
faulty or negligent
workmanship constitute
an occurrence if the
insured did not intend for
the damage to occur.
Kentucky Essex Ins. Co. v. Ricky
Robinson Constr., Inc.
2015 U.S. Dist. LEXIS
26425 (E.D. Ky. 2015)
Insurer sought declaratory
relief for claims asserted
by homeowner against
defendant contractor.
Possible occurrence Not fortuitous and hence,
no occurrence, where
claims center on
substandard construction
over which insured had
control.
Liberty Mutual Fire Ins.
Co. v. Kay & Kay
Contracting, 545 Fed.
Appx. 488 (6th Cir. 2013)
Subcontractor’s
foundation work caused
settling.
No occurrence Faulty work within
insured’s control is neither
accidental nor fortuitous.
McBride v. Acuity, 2011
U.S. Dist. LEXIS 141498
(W.D. Ky. 2011)
Insured was hired to
construct a home and
subcontracted footer and
basement work.
Homeowners sued
insured for issues related
to dierential settlement
of house.
No occurrence Faulty workmanship alone
is not an occurrence.
Cincinnati Ins. Co. v.
Motorists Mut. Ins. Co.,
306 S.W. 3d 69 (Ky. 2010)
Homeowners sued
contractor for faulty
construction requiring
home to be razed as
beyond repair.
No occurrence Defective construction
claim against a builder
alone is not a claim for
property damage caused
by an occurrence.
Global Gear & Mach. Co.,
Inc. v. Capitol Indem.
Corp., 2010 U.S. Dist.
LEXIS 86745 (W.D. Ky.
2010)
Contractor sued for
faulty work, leading to
damaged vessels and
owner’s reputation.
No occurrence Alleged intentional
conduct and contractual
claims are not fortuitous
and therefore, not an
occurrence.
Bituminous Cas. Corp. v.
Kenway Contracting, Inc.,
240 S.W. 3d 633 (Ky.
2007)
Contractor hired to
demolish carport causing
substantial damage to
home.
Occurrence Damage to the property
was unexpected and
unintended by the
insured.
Munich Re Construction Defect Resource Guide 9
Is there an occurrence?
State Citation Facts Finding Comments
Louisiana Travelers Cas. & Sur. Co.
of Am. v. Univ. Facilities,
Inc., 2012 U.S. Dist. LEXIS
49970 (E.D. La. 2012)
Contractor sued for faulty
installation of wall board.
Occurrence Faulty wall board
installation caused
damage to the building.
Martco Ltd. P’ship v.
Wellons, Inc., 2008 U.S.
Dist. LEXIS 98385 (W.D.
La. 2008), a’d, 312 Fed.
Appx. 716 (5th Cir. 2009),
a’d, 2009 U.S. App.
LEXIS 25428 (5th Cir.)
Contractor hired to
perform plant
improvements, leading to
tank and valve failure.
Occurrence Defects in construction
that result in damage
subsequent to completion
constitute an occurrence.
Grimaldi Mech., L.L.C. v.
Gray Ins. Co., 933 So. 2d
887 (La. Ct. App. 2006)
Mechanical contractor
sought cost of defending
claims asserted against it
for damages resulting
from alleged defective
installation of a piping
system.
Possible occurrence As complaint alleged both
breach of contract and
damages resulting from
the insured’s breach of
contract, there may have
been an occurrence,
resulting in property
damage, thereby
triggering the insurer’s
duty to defend.
Joe Banks Drywall &
Acoustics, Inc. v.
Transcontinental Ins. Co.,
753 So. 2d 980 (La. Ct.
App. 2000)
Vinyl flooring installed by
contractor stained by
seepage.
Occurrence Since there was no
allegation that the
damage was intentional,
the damage constituted
an occurrence.
Maine Oxford Aviation, Inc. v.
Global Aero, Inc., 680 F.3d
85 (1st Cir. 2012)
Contractor sued for
negligent work on aircraft,
leading to defective seats
and windows.
Occurrence Cracks in window were
unintended and could be
accidental.
Maryland French v. Assurance Co. of
Am., 448 F.3d 693 (4th
Cir. 2006)
Contractor applied
synthetic stucco to
exterior of home, leading
to water damage and
moisture five years later.
Occurrence
and no occurrence
Damage to the
nondefective wall caused
by moisture intrusion was
unexpected and
unintended. Damage to
stucco itself from faulty
work did not result from
an occurrence.
Lerner Corp. v. Assurance
Co. of Am., 707 A.2d 906
(Md. Ct. Spec. App. 1998)
Insured developer and
project manager sought to
recover costs incurred in
repairing a defective
exterior stone façade
installed by subcontractor.
No occurrence The obligation to repair
the building’s façade did
not result from an
“accident” but simply
from the insured’s failure
to satisfy its obligation
under the contract.
IA Constr. Corp. v. T&T
Surveying, Inc., 822 F.
Supp. 1213 (D. Md. 1993)
Contractor sued for faulty
work, requiring removal
and replacement of other
nondefective work.
No occurrence Some faulty work was
only item to repair, no
occurrence or property
damage.
10 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Maryland Reliance Ins. Co. v.
Mogavero, 640 F. Supp.
84 (D. Md. 1986)
Contractor sued for
improper drywall, missing
insulation, and inadequate
water heater capacity.
No occurrence Occurrence does not
include the normal,
expected consequences
of poor workmanship.
Massachusetts Friel Luxury Home Constr.,
Inc. v. Probuilders
Specialty Ins. Co. RRG,
2009 U.S. Dist. LEXIS
121775 (D. Mass. 2009)
Contractor sued for faulty
renovation work.
No occurrence Faulty workmanship
alone does not constitute
an occurrence.
Am. Home Assur. Co. v.
AGM Marine Contrs, Inc.,
379 F. Supp. 2d 134 (D.
Mass. 2005), a’d, 467
F.3d 810 (1st Cir. 2006)
Contractor sued for
building faulty dock
system.
No occurrence Faulty workmanship alone
does not constitute an
occurrence. Only docks
themselves sustained
damage.
Am. Home Assurance Co.
v. Libbey-Owens-Ford Co.,
786 F.2d 22 (1st Cir. 1986)
Window manufacturer
sued for defective product
and failure to meet
contract specifications.
Occurrence and no
occurrence
Coverage for damages
resulting from physical
injury to windows, but no
coverage for repairs to
and replacement of
windows.
Michigan Oak Creek Apt’s., LLC v.
Garcia, 2013 Mich. App.
LEXIS 550 (Mich. Ct. App.
2013)
Faulty roofing repairs
caused mold and other
interior damage.
Occurrence Extensive water and
mold damage caused
by an occurrence.
Houseman Constr. Co. v.
Cincinnati Ins. Co., 2010
U.S. Dist. LEXIS 39961
(W.D. Mich. 2010)
Contractor sued for faulty
work, leading to sinking
floors.
Occurrence and no
occurrence
Damage to other parts of
store or loss of store’s use
is an occurrence.
Repairing sinking floor is
not an occurrence.
Ahrens Constr., Inc. v.
Amerisure Ins. Co., 2010
Mich. App. LEXIS 290
(Mich. Ct. App. 2010)
Contractor sued for
defective roof, requiring
replacement.
Occurrence Damages not rising solely
from faulty workmanship
are considered resulting
from an occurrence.
Radenbaugh v. Farm
Bureau Gen. Ins. Co. of
Mich., 610 N.W. 2d 272
(Mich. Ct. App. 2000)
Mobile home seller
provided erroneous
schematics to contractors
to build basement and
foundation.
Occurrence There were other
damages to property
(i.e., the homeowners’
basement and
foundation).
Minnesota Aten v. Scottsdale Ins. Co.,
511 F.3d 818 (8th Cir.
2008)
Builder sued for defective
home construction,
leading to uneven
basement and water
damage.
Occurrence Damage to other property
due to faulty
workmanship.
Bor-Son Bldg. Corp. v.
Emp’rs Commercial Union
Ins. Co. of Am., 323 N.W.
2d 58 (Minn. 1982)
Contractor sued for
defective construction of
building and breach of
construction agreement.
No occurrence Faulty workmanship only
led to damage of building.
Damages arose only from
a breach of contract.
Munich Re Construction Defect Resource Guide 11
Is there an occurrence?
State Citation Facts Finding Comments
Minnesota Ohio Cas. Ins. Co. v.
Terrace Enters., Inc., 260
N.W. 2d 450 (Minn. 1977)
Contractor took
precautions for
freezing soil in building
project, which
subsequently failed.
Occurrence The insured was aware
of the dangers and took
precautions that
ultimately failed. Such
conduct was negligent
and constituted an
occurrence.
Mississippi Carl E. Woodward, LLC v.
Acceptance Indem. Ins.
Co., 2011 U.S. Dist. LEXIS
92659 (S.D. Miss. 2011)
Insured general contractor
on condominium project
sued concrete
subcontractor for defects
in concrete work.
Possible occurrence Faulty workmanship and
hiring of a subcontractor
are not as a matter of law
excluded from coverage.
Record unclear whether
subcontractor’s defective
work was accidental.
Claim triggers duty to
defend.
Lafayette Ins. Co. v.
Peerboom, 2011 U.S. Dist.
LEXIS 58985 (S.D. Miss.
2011)
Homeowners sued
insured contractor,
alleging that insured’s
negligent work to elevate
their home resulted in
damage to the entire
structure.
Occurrence Because the complaint
leaves open the possibility
that the alleged property
damage was caused by an
accident (an inadvertent
act) and that the damage
was thus the result of an
occurrence, the insurer
has duty to defend.
Architex Ass’n, Inc. v.
Scottsdale Ins. Co., 27 So.
3d 1148 (Miss. 2010)
Contractor sued for
deficiencies in
construction of inn
foundation.
Possible occurrence Potential coverage for
unexpected or unintended
property damage
resulting from faulty work.
Nationwide Mut. Fire Ins.
Co. v. Hayes, 2010 U.S.
Dist. LEXIS 92988 (S.D.
Miss. 2010)
Construction company
sued for negligent home
construction.
Occurrence Negligent construction is
an occurrence under
Mississippi law.
Missouri Emp’rs Mut. Cas. Co. v.
Luke Draily Constr. Co.,
Inc., 2011 U.S. Dist. LEXIS
69929 (W.D. Mo. 2011)
Hotel developer sued
general contractors,
alleging defects in hotel
roof installed by
subcontractors.
No occurrence Pure contract claims do
not constitute
occurrences under a CGL
policy. There must be an
accident to trigger
coverage, and
subcontractor’s work was
intentional but poor.
Cincinnati Ins. Co. v.
Stolzer, 2010 U.S. Dist.
LEXIS 9986 (E.D. Mo.
2010)
Homeowner sued
homebuilder, alleging
new home was damaged
because of faulty soil
conditions.
No occurrence Builder chose not to test
soil and home was
damaged by problematic
soil conditions.
12 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Missouri St. Paul Fire & Marine Ins.
Co. v. Building Constr.
Enters. Inc., 484 F.Supp.
2d 1004 (W.D. Mo. 2007)
Underground duct banks
for electrical, data, and
communications cables
did not meet design
requirements. General
contractor sought costs of
correcting those
deficiencies and for
related landscaping.
No occurrence Substandard work and
need for grass re-seeding
not considered an
accident or occurrence.
Cincinnati Ins. Co. v.
Venetian Terrazzo, Inc.,
198 F. Supp. 2d 1074 (Mo.
2001)
Contractor sued for
failing to test concrete
substrate before terrazzo
floor installed.
No occurrence Insured’s breach of
contract in performance
of its work was not an
accident or occurrence.
Taylor-Morley-Simon, Inc.
v. Mich. Mut. Ins. Co., 645
F. Supp. 596 (E.D. Mo.
1986), a’d, 822 F.2d 1093
(8th Cir. 1987)
Concrete slab in
residential construction
caused walls and ceilings
to crack.
Occurrence Damage to home qualified
as an accident resulting in
property damage not
expected or intended by
the insured.
Montana RQR Dev., LLC, v. Atlantic
Cas. Ins. Co., 2014 U.S.
Dist. LEXIS 171084 (D.
Mont. 2014)
Excavation contractor
sued by developer for
faulty work in roadway
construction.
No occurrence Since claims arise from
non-compliance with
applicable standard of
care, and not from an
accident, there is no
occurrence.
Penn-Star Ins. Co. v.
Coyote Ridge Constr., Inc.,
2012 U.S. Dist. LEXIS
24882 (D. Mont. 2012)
Contractor sued for
misrepresentations and
failure to complete
construction of home.
No occurrence Acts or omissions of
insured, intentional or
negligent are covered,
unless injury is expected
or intended.
Haskins Constr., Inc. v.
Mid-Continent Cas. Co.,
2011 U.S. Dist. LEXIS
127231 (D. Mont. 2011)
Homeowners sued
contractor, alleging faulty
home construction.
No occurrence Construction
encompasses faulty
workmanship alleged by
homeowners.
King v. State Farm Fire &
Cas. Co., 2010 U.S. Dist.
LEXIS 49029 (D. Mont.
2010)
Log home purchaser
sued manufacturer and
sales agent, alleging that
log home construction
package had numerous
deficiencies.
No occurrence No coverage for
intentional acts that lead
to accidental injuries
under definition of
occurrence. Thus,
business decisions of
insureds not an
occurrence.
Lloyd A. Twite Family
P’ship v. Unitrin Multi Line
Ins., 192 P.3d 1156 (Mont.
2008)
Architect sued for
designs that violated
the Fair Housing Act
and the Montana Human
Rights Act.
No occurrence Failure to comply with
FHA and MHRA
requirements is not an
accident that meets the
definition of occurrence.
Nebraska Auto-Owners Ins. Co. v.
Home Pride Ins. Cos., 684
N.W. 2d 571 (Neb. 2004)
Roofing contractor sued
for improper shingle
installation, which
damaged roof and
structures.
Occurrence Faulty workmanship
causing property damage
to something other than
the insured’s work
product constitutes an
occurrence.
Munich Re Construction Defect Resource Guide 13
Is there an occurrence?
State Citation Facts Finding Comments
Nevada Big-D Constr. Corp. v.
Take It For Granite Too,
917 F. Supp. 2d 1096 (D.
Nev. 2013)
Contractor sued for
defective remodeling of
building, leading to stone
tile displacement.
Occurrence Faulty workmanship
itself is not an accident,
but unexpected
consequences and faulty
workmanship could
constitute an occurrence.
New
Hampshire
Concord Gen. Mut. Ins.
Co. v. Green & Co. Bldg.
and Dev. Corp., 8 A.3d 24
(N.H. 2010)
Contractor sued for
defective chimneys,
leading to carbon
monoxide and gases in
homes.
No occurrence Released gases caused no
physical apparent damage
to property. Loss of use of
work product alone does
constitute an occurrence.
Webster v. Acadia Ins. Co.,
934 A.2d 567 (N.H. 2007)
Contractor sued for
defective roof installation,
requiring replacement
and repairs.
Occurrence The school alleges
damage to property other
than the work of the
insured.
New Jersey Cypress Point Condo.
Ass’n. v. Selective Way
Ins. Co., 2015 N.J. Super.
Unpub. LEXIS 721 (Law
Div. 2015)
Homeowners Association
sued insurers of defaulted
contractor for various
water damage.
No occurrence No occurrence under
continuous trigger where
damage manifests prior
to inception of subject
policies.
Cypress Point Condo.
Ass’n v. Adria Towers,
L.L.C., 2015 N.J. Super.
LEXIS 114 (App. Div. 2015)
Homeowners Association
sued developer,
developer’s insurers and
subcontractors for
consequential property
damage caused by
defective work.
Occurrence Unintended and
unexpected consequential
damages caused by
subcontractors’ defective
work are an occurrence.
Pa. Nat’l Mut. Cas. Ins. Co.
v. Parkshore Dev. Corp.,
403 Fed. Appx. 770 (3d
Cir. 2010)
Contractor sued for water
damage caused by
improper stucco caulking
around windows.
No occurrence No occurrence where
faulty workmanship
causes damage to
completed project itself.
S.N. Golden Estates, Inc.
v. Cont’l Cas. Co., 680
A.2d 1114 (N.J. App. Div.
1996)
Contractor sued for faulty
sewage system
installation, causing
eluent to seep onto lawn
and into residences.
No occurrence Faulty workmanship
caused damage to
property other than work
product of the insured.
Weedo v. Stone-E-Brick,
Inc., 405 A.2d 788 (N.J.
1979)
Homeowners sued
mason after cracks in
stucco necessitated
replacement.
No occurrence Replacement or repair of
faulty goods and work is
a business expense, not
an occurrence giving rise
to insurable liability.
New Mexico O’Rourke v. New
Amsterdam Cas. Co., 362
P.2d 790 (N.M. 1961)
Contractor sued for faulty
roof installation, leading
to leakage and damage to
home and contents.
Occurrence Rain that caused damage
was sudden and not
predicted and can be
considered an accidental
cause or result.
New York Exeter Bldg. Corp. v.
Scottsdale Ins. Co., 913
N.Y.S.2d 733 (N.Y. App.
Div. 2010)
Condominium association
sued general contractor,
alleging defects in design
and construction work
performed by insured and
its subcontractors.
No occurrence CGL policies are not
intended to provide
indemnification for
defective work product.
14 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
New York Baker Residential Ltd.
P’ship v. Travelers Ins. Co.,
782 N.Y.S. 2d 249 (N.Y.
App. Div. 2004)
Contractor sued for
installing defective
structural beams.
No occurrence No damage to property
distinct from insured’s
own work product.
North
Carolina
Harleysville Mut. Ins. Co.
v. Hartford Cas. Ins. Co.,
2015 U.S. Dist. LEXIS
25362 (E.D. N.C. 2015)
Contractor sought
coverage from several
insurers for defective
roofing liabilities.
Occurrence There is an occurrence in
each period from date of
construction through date
of claim or suit.
Nat’l Union Fire Ins. Co. v.
Intercoastal Diving, Inc.,
2012 U.S. Dist. LEXIS
76291 (E.D.N.C. 2012)
Condominium and boat
owners association sued
general contractor
asserting bulkhead
constructed by insured
suered from numerous
defects.
Possible occurrence Damage to property other
than bulkhead caused by
insured’s defective work
may constitute property
damage caused by an
occurrence.
Builders Mut. Ins. Co. v.
Mitchell, 709 S.E. 2d 528
(N.C. Ct. App. 2011)
Insured contractor was
sued by homeowner after
insured’s faulty
workmanship and repairs
caused further water
damage to home.
Possible occurrence Allegations of damage to
previously undamaged
property could constitute
an accident and thus an
occurrence under the
policy.
ABT Bldg. Prods. Corp. v.
Nat’l Union Fire Ins. Co. of
Pittsburgh, Inc., 472 F.3d
99 (4th Cir. 2006)
Siding manufacturer sued
for defective product,
leading to deterioration
and damage to other parts
of homes.
Occurrence Defective product caused
damages and negligent
manufacture of defective
product constitutes an
accident under a CGL
policy.
Travelers Indem. Co. v.
Miller Bldg. Corp., 97 Fed.
Appx. 431 (4th Cir. 2004)
Contractor sued for faulty
workmanship leading to
water damage cracks in
hotel framework.
Occurrence and no
occurrence
Correcting faulty work
does not constitute an
occurrence. Defective
work causing damages to
guestrooms is an
occurrence.
Iowa Mut. Ins. Co. v. Fred
M. Simmons, Inc., 128 S.E.
2d 19 (N.C. 1962)
Roofing contractor sued
for damages caused by
rainwater leaking into
building due to insured’s
failure to cover roof.
Possible occurrence The term accident does
not necessarily exclude
the contractor’s
negligence in leaving roof
inadequately covered.
North Dakota K&L Homes, Inc. v. Am.
Family Mut. Ins. Co., 829
N.W. 2d 724 (N.D. 2013)
Homeowner sued
contractor for breach
of warranties related to
defective construction.
Possible occurrence Faulty workmanship may
be an occurrence if
“unexpected and
unintended” by contractor.
K&L Homes, Inc. v. Am.
Family Mut. Ins. Co., 829
N.W. 2d 724 (N.D. 2013)
Building owners claimed
that while replacing roof,
the insured contractor
failed to protect from
rainstorms, causing
extensive water damage
to the interior of the
building and damage to
tenants’ property.
Occurrence Damage to property other
than the insured’s work
product is a covered
occurrence.
Munich Re Construction Defect Resource Guide 15
Is there an occurrence?
State Citation Facts Finding Comments
Ohio Reggie Constr., Ltd. v.
Westfield Ins. Co., 2014
Ohio App. LEXIS 3703
(Ohio Ct. App. 2014)
Developer sought
coverage for homeowner’s
defect claims.
No occurrence Mold and water
infiltration were
foreseeable as the result
of poor workmanship,
therefore not fortuitous.
Westfield Ins. Co. v.
Custom Agri Sys., 979
N.E.2d 269 (Ohio 2012)
Contractor sued for
faulty construction
of steel grain bin.
No occurrence Defective construction
or workmanship itself
does not constitute an
occurrence.
Myers v. United Ohio Ins.
Co., 2012 Ohio 340 (Ohio
Ct. Ap,. 2012)
Homeowners sued
insured contractor,
alleging he failed to
complete the construction
of an addition to their
home and that the work
done was faulty.
No occurrence Damages to the work
product itself do not
qualify as an occurrence.
JTO, Inc. v. State Auto.
Mut. Ins. Co., 956 N.E.2d
328 (Ohio Ct. App. 2011)
Hotel owner sued general
contractor, alleging that
insured’s faulty
workmanship resulted in
water infiltration
throughout hotel,
resulting in wall and
ceiling damage.
Possible occurrence In assessing whether
consequential damages
from faulty workmanship
are covered, key issues are
whether contractor
controlled process leading
to damage and whether
damage was anticipated.
Westfield Ins. Co. v. R.L.
Diorio Custom Homes,
Inc., 932 N.E.2d 369
(Ohio Ct. App. 2010)
Homeowner sued building
contractor, alleging
contractor failed to
construct home in
workmanlike manner.
No occurrence Defective workmanship
does not constitute an
accident.
Oklahoma U.S. Fid. & Guar. Co. v.
Briscoe, 239 P.2d 754
(Okla. 1951)
Contractor sued for
highway construction
which caused dust to
penetrate home and
property.
No occurrence Claims asserted
were predicated upon
voluntary, intentional,
tortious, and wrongful
acts.
Oregon Willmar Dev., LLC v. Ill.
Nat’l Ins. Co., 2011 U.S.
App. LEXIS 25854 (9th
Cir. 2011)
Contractor sued for
negligent site selection
and construction of home.
Occurrence Damages were
unintended, accidental
results of builder’s alleged
negligence.
Cal. Ins. Co. v. Stimson
Lumber Co., 2004 U.S.
Dist. LEXIS 10098 (D. Or.
2004), a’d in part, 325
Fed. Appx. 496 (9th Cir.
2009)
Homeowners sued
manufacturer asserting
warranty and repair
claims related to defective
siding.
No occurrence A breach of contract or
warranty is not an
occurrence. No allegation
of third-party property
damage.
Oak Crest Constr. Co. v.
Austin Mut. Ins. Co., 998
P.2d 1254 (Or. 2000)
Contractor sought to
recover costs of stripping
and repainting cabinets
painted by subcontractor
that did not properly cure.
No occurrence No accident and no
occurrence.
16 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Pennsylvania State Farm Fire & Cas. Co.
v. Brighton Exteriors, Inc.,
2015 U.S. Dist. LEXIS
25712 (E.D. Pa. 2015)
Insurer sought declaratory
relief for homeowner’s
claims against its
contractor-insured.
No occurrence Faulty workmanship,
regardless of how pled,
does not constitute an
occurrence.
State Farm Fire & Cas. Co.
v. McDermott, 2014 U.S.
Dist. LEXIS 147702 (E.D.
Pa. 2014)
Contractor sued by
developer for faulty work,
negligence and breach
of warranty.
No occurrence Faulty workmanship not
an accident or unforeseen.
Indatex Inc. v. Nat’l Union
Fire Ins. Co. of Pitts. Pa.,
83 A. 3d 418 (Pa. Super.
2013)
Breach of warranty and
other claims involving
door and window
manufacture.
Occurrence Claims of defective
products causing property
loss to other than
insured’s property is an
occurrence.
Westfield Ins. Co. v.
Bellevue Holding Co., 856
F. Supp. 2d 683 (E.D. Pa.
2012)
Contractor sued in
residential development
cases largely arising from
stucco issues.
No occurrence No occurrence for breach
of contract for faulty
workmanship claims.
Specialty Surfaces Int’l,
Inc. v. Cont’l Cas. Co., 609
F.3d 223 (3d Cir. 2010)
Contractors sued for
faulty installation of
subdrain system resulting
in damage to installed
turf.
No occurrence Faulty workmanship itself
is not an occurrence. The
damages here were to the
insured’s own product due
to negligence.
Kvaerner Metals Div. of
Kvaerner U.S., Inc. v.
Commercial Union Ins.
Co., 908 A.2d 888 (Pa.
2006)
Contract claims for faulty
construction against
fabricator of industrial
ovens.
No occurrence Faulty workmanship itself
is not an accident or
occurrence.
Gene & Harvey Builders,
Inc. v. Pa. Mfrs. Ass’n, Inc.,
517 A.2d 910 (Pa. 1986)
Builder sued after land
subsided and pulled away
from the foundation.
No occurrence Claims were either not
accidents and not
occurrences, or excluded
by “your product” or “your
work” exclusions.
Rhode Island Furey Roofing & Constr.
Co., Inc. v. Emp’rs Mut.
Cas. Co., 2010 R.I. Super
LEXIS 24 (R.I. Super. Ct.
2010)
General contractor
asserted claims against
subcontractor for
deficiencies in roofing
work.
Occurrence Damage to the building
from original roof leaks
remained unresolved and
the work of other
contractors had to be
replaced.
Aetna Cas. & Sur. Co. v.
Consulting Env’t
Engineers, Inc., 1989 R.I.
Super. LEXIS 137 (R.I.
Super. Ct. 1989)
Design engineers sued for
improper grading
specifications.
Occurrence Unexpected settling
constituted an
occurrence.
Munich Re Construction Defect Resource Guide 17
Is there an occurrence?
State Citation Facts Finding Comments
South
Carolina
Builders Mut. Inc. Co. v.
Lacey Constr. Co., LLC,
2012 U.S. Dist. LEXIS
41588 (D.S.C. 2012)
Homeowners association
sued insured for
construction defects in
certain common areas.
Occurrence
and no occurrence
No coverage for repairing
defectively constructed
components, but coverage
may be available to the
extent defectively
constructed component
causes damage to another
component.
Jessco, Inc. v. Builders
Mut. Ins. Co., 2009 U.S.
Dist. LEXIS 86920 (D.S.C.
2009), a’d in part, 2012
U.S. App. LEXIS 6502
(4th Cir. 2012)
Homeowners sued
contractor, alleging
defects in residential
construction.
Occurrence
and no occurrence
Failure to repair faulty
work is not an occurrence.
Flooding of yard
constitutes an occurrence
because it led to
continuous exposure to
the harmful conditions in
adjacent wetlands.
Crossmann Cmtys. of N.C.
v. Harleysville Mut. Ins.
Co., 717 S.E. 2d 589 (S.C.
2011)
Developer sued for faulty
construction resulting in
water penetration and
damage to nondefective
components.
Occurrence The costs of replacing
defective stucco were not
covered, but damage
caused by resulting
continuous moisture
intrusion was covered.
L-J, Inc. v. Bituminous Fire
& Marine Ins. Co., 621 S.E.
2d 33 (S.C. 2005)
Developer sued contractor
for breach of contract,
warranty and negligence
in road construction.
No occurrence All of the allegations were
based on faulty
workmanship, which does
not constitute an accident
or occurrence.
South Dakota Corner Constr. Co. v. U.S.
Fid. & Guar. Co., 638 N.W.
2d 887 (S.D. 2002)
Contractor sued for faulty
construction and design
defects in ventilation work
at a school.
Occurrence and no
occurrence
No coverage for damage
caused by and confined to
insured’s own work. To the
extent work caused
damage to other property,
damages were covered.
Tennessee Forrest Constr., Inc. v.
Cincinnati Ins. Co., 703
F.3d 359 96th Cir. Tenn.
2013)
Contractor sued for
defective construction of
home, leading to
damaged foundation and
cracks.
Occurrence Faulty work led to damage
to property and unsafe
living conditions.
Travelers Indem. Co. of
Am. v. Moore & Assocs.,
Inc., 216 S.W. 3d 302
(Tenn. 2007)
Window contractor sued
for negligent design and
installation, resulting in
water damage and
deterioration of walls.
Occurrence Water penetration was
unforeseeable,
constituting an accident
and an occurrence.
18 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
Texas Building Specialties, Inc.
v. Liberty Mut. Fire Ins.
Co., 712 F.Supp. 2d 628
(S.D. Tex. 2010)
Homebuilder sued
insured HVAC
subcontractor, alleging
that the subcontractor’s
defective work caused
water damage.
Occurrence Allegation that
subcontractor’s work was
defectively designed and
installed does not excuse
duty to defend.
Landstar Homes Dallas,
Ltd. v. Mid-Continent Cas.
Co., 2010 U.S. Dist. LEXIS
131516 (N.D. Tex. 2010)
Homeowner sued insured
homebuilder, alleging
damages as a result of a
defective foundation.
Occurrence Shifting of the foundation
was inadvertent and
unintended, constituting
an occurrence.
Sigma Marble & Granite-
Houston, Inc. v. Amerisure
Mut. Ins. Co., 2010 U.S.
Dist. LEXIS 137096 (S.D.
Tex. 2010)
General contractor sued
insured subcontractor,
alleging that faulty stone
work increased costs and
delayed completion.
Occurrence Because there is no
allegation that the insured
intended or expected its
work to cause damage,
the claims against the
insured constitute an
occurrence.
Pine Oak Builders, Inc. v.
Great Am. Lloyds Ins. Co.,
279 S.W. 3d 650 (Tex.
2009)
Homeowners sued
insured builder alleging
defective construction
caused water damage.
Occurrence A claim of faulty
workmanship against a
homebuilder is a claim for
property damage caused
by an occurrence under a
CGL policy.
Home Owners Mgmt.
Enters., Inc. v.
Mid-Continent Cas. Co.,
294 Fed. Appx. 814 (5th
Cir. 2008)
Homeowner sued insured
homebuilder, alleging
structural and cosmetic
damages resulting from
construction defects.
Occurrence A deliberate act,
performed negligently, is
an accident if the eect is
not intended or expected.
Lamar Homes, Inc. v. Mid-
Continent Cas. Co., 242
S.W. 3d 1 (Tex. 2007)
Homeowners sued
contractor for defective
foundations.
Occurrence No suggestion the insured
expected or intended its
work to damage the
home.
Utah Cincinnati Ins. Co. v.
Spectrum Dev. Corp.,
2015 U.S. Dist. LEXIS
20635 (D. Utah 2015)
Developer of residence
sought coverage for
arbitration award in favor
of homeowner.
Occurrence Insurer’s claim of no
occurrence owing to lack
of adequate supervision in
construction fails, since
damage was not intended.
Cincinnati Ins. Co. v.
Linford Bros. Glass Co.,
2010 U.S. Dist. LEXIS
11226 (D. Utah 2010)
Developer sued window
and door manufacturer for
defects causing damage
to other portions of
homes.
No occurrence Negligent manufacture of
windows and doors is
likely to cause damage to
property where defective
products are installed.
Great Am. Ins. Co. v.
Woodside Homes Corp.,
448 F. Supp. 2d 1275 (D.
Utah 2006)
Contractors and
developers sued for faulty
work, leading to structural
damage in homes.
Occurrence While faulty work itself is
not an occurrence,
damage resulting from
negligent acts can be
considered an occurrence.
Munich Re Construction Defect Resource Guide 19
Is there an occurrence?
State Citation Facts Finding Comments
Virginia Dragas Mgmt. Corp. v.
Hanover Ins. Co., 798 F.
Supp. 2d 758 (E.D. Va.
2011)
Contractor sued for costs
to remove and replace
Chinese drywall and
repair other damage
caused by drywall.
Occurrence
and no occurrence
Replacing defective
drywall itself is not an
occurrence; repair or
replacement of
nondefective components
constitutes an occurrence.
Builders Mut. Ins. Co. v.
Dragas Mgmt. Corp., 709
F. Supp. 2d 441 (E.D. Va.
2010)
Homeowners sued
builder, alleging
damages resulting from
Chinese drywall.
Occurrence Damage that defective
work caused to
nondefective work
constitutes an occurrence.
Washington Big Constr., Inc. v. Gemini
Ins. Co., 2012 U.S. Dist.
LEXIS 71350 (W.D. Wash.
2012)
Homeowners sued
insured homebuilder,
alleging incomplete,
nonconforming, and
unsatisfactory
construction work
resulted in additional
expenses and diminution
of property value.
No occurrence Pure workmanship
defects are not accidents
or occurrences, since CGL
policies are not meant to
be performance bonds or
product liability
insurance.
Indian Harbor Ins. Co. v.
Transform LLC, 2010 U.S.
Dist. LEXIS 94080 (W.D.
Wash. 2010)
Condominium developer
asserted claims against
insured modular
condominium unit
manufacturer, alleging
units were defective and
their repair and
replacement caused
damage to existing
structures.
Occurrence Damage to other property
resulting from the
insured’s defective
workmanship is an
occurrence.
Far Northwest Dev. Co.
LLC v. Cmty. Ass’n of
Underwriters of Am., 362
Fed. Appx. 861 (9th Cir.
2010)
Developer sued for failure
to investigate and repair
potential construction
defects, causing property
damage to condominium
buildings.
Occurrence It was not “unforeseen,
involuntary, unexpected
and unusual,” as
developer admitted
overlooking construction
problems.
Mid-Continent Cas. v.
Titan Constr. Corp., 281
Fed. Appx. 766 (9th Cir.
2008)
Condominium association
sued building contractor,
alleging extensive water
damage resulting from
construction deficiencies.
Occurrence Occurrence includes
deliberate manufacture of
a product which was
inadvertent but was
defectively manufactured.
Absent intentional breach
of contract, negligent
construction constituted
an occurrence.
Yakima Cement Products
Co. v. Great Am. Ins. Co.,
608 P.2d 254 (Wash.
1980)
Building contractor sued
manufacturer of concrete
wall panels, alleging
defective panels had to be
removed and repaired.
Occurrence Unintentional and
unexpected improper
manufacture of concrete
panels is an accident.
20 Munich Re Construction Defect Resource Guide
Is there an occurrence?
State Citation Facts Finding Comments
West Virginia Cherrington v. The
Pinnacle Group, Inc., 745
S.E.2d 508 (W.Va. 2013)
Homeowner sued builder
for negligence in the
construction of residence.
Occurrence Court reversed earlier
decision in Erie Insurance
and held that defective
workmanship itself
constitutes an occurrence,
since the damages were
not deliberate, expected,
or foreseen.
Erie Ins. Prop. & Cas. Co. v.
Pioneer Home
Improvement, Inc., 526
S.E.2d 28 (W.Va. 1999)
Homeowners sued
building contractor,
alleging faulty
workmanship in
performance of building
contract.
No occurrence CGL policies do not
provide protection for
poor workmanship but
from personal injury or
property damage to
others caused by the
insured’s negligence.
Wisconsin Dahl v. Peninsula Builders,
LLC, 855 N.W. 2d 904
(Wisc. App. 2014)
Contractor sued for faulty
remodeling.
No occurrence Faulty workmanship alone
is not an occurrence.
Yeager v. Polyurethane
Foam Insulation, LLC,
2012 WI App. 11 (Wisc. Ct.
App. 2012)
Homeowner sued
insulation contractor,
alleging workmanship
caused frost pockets,
condensation, and other
damage to home.
No occurrence Faulty workmanship, in
and of itself, is not an
occurrence.
Acuity, a Mut. Ins. Co. v.
VPP Group, LLC, 810
N.W.2d 812 (Wisc. Ct.
App. 2012)
Plant owner’s insured
filed subrogation action
against insured
contractor, alleging faulty
excavation work caused
soil to settle and damage
to the existing plant.
Occurrence Faulty workmanship that
causes unintended harm
to other property is an
occurrence.
Stuart v. Weisflog’s
Showroom Gallery, Inc.,
753 N.W. 2d 448 (Wis.
2008)
Homeowners claimed
misrepresentation and
design and construction
defects in remodeling
project.
No occurrence Misrepresentations
of professional ability
does not constitute
an occurrence.
Am. Fam. Mut. Ins. Co. v.
Am. Girl, Inc., 673 N.W. 2d
65 (Wis. 2004)
Soil engineering
subcontractor provided
faulty site preparation
advice, resulting in
structural damage.
Occurrence Soil settlement which
resulted from faulty site
preparation advice was
accidental, not
anticipated.
Wyoming Emp’rs Mut. Cas. Co. v.
Bartile Roofs, 618 F.3d
1153 (10th Cir. 2010)
Hotel owner sued
building contractor,
alleging defects
in construction.
No occurrence All claims were for
subcontractor’s negligent
roofing work, and natural
results of unworkmanlike
construction, which does
not constitute an
occurrence.
Munich Re Construction Defect Resource Guide 21
Is there property damage?
Key in a construction defect claim is whether an insured’s liability is based on actual physical
injury to tangible property or a loss of use of such property. Where the construction defect
claim against the contractor does not involve tangible, physical injury, courts have generally
found there is no covered property damage. Most courts have also held that claims limited to
fixing or replacing all or part of defective construction and/or claims of resulting diminution
in value because of defective construction work or materials with no physical injury, are not
claims for property damage. Typically, defective workmanship or use of non-conforming
materials in and of itself, does not constitute property damage.
The following is a summary of selected cases addressing construction defect as
property damage.
22 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Alabama Town & Country Prop.,
L.L.C. v. Amerisure Ins.
Co., 2011 Ala. LEXIS 183
(Ala. 2011)
Automobile facility owner
sued contractor, alleging
faulty construction.
Possible property damage Damages awarded to
compensate for damage
to personal property or
nondefective portions of
the facility constitute
property damage.
U.S. Fid. & Guar. Co. v.
Warwick Dev. Co., 446 So.
2d 1021 (Ala. 1984)
Home purchasers sued
builder for unworkmanlike
construction and
misrepresentation.
Not property damage No evidence that
misrepresentations
caused physical injury to
tangible property.
Alaska Fejes v. Alaska Ins. Co.,
984 P.2d 519 (Alaska
1999)
Homeowner sued
contractor, alleging
improper curtain drain
construction caused
failure of septic system.
Property damage The failure of the curtain
drain caused destruction
of the septic system,
which constitutes
“destruction of tangible
property.”
Arizona Am. Family Mut. Ins. Co. v.
Spectre W. Builders Corp.,
2011 U.S. Dist. LEXIS
11328 (D. Ariz. 2011)
Homeowners association
sued insured contractor,
alleging faulty
workmanship, and is
seeking to recover the
cost of the defective
work and resulting
water damage.
Property damage The cost of repairing
defective work does not
constitute property
damage, but the policies
do provide coverage for
the damages to other
property.
U.S. Fid. & Guar. Corp. v.
Advance Roofing &
Supply Co., 788 P.2d 1227
(Ariz. 1990)
Homeowners association
sued insured roofing
contractor, alleging
faulty work on roofs in
housing complex.
Not property damage Allegations not claims
for property damage;
cost of repairing defects
does not constitute
property damage.
Univ. Mech. Contractors
of Ariz., Inc. v. Puritan Ins.
Co., 723 P.2d 648 (Ariz.
1986)
Contractor hired to
build solar heating facility
sued piping supplier,
alleging defects in
material, requiring repair
of entire system.
Property damage Installation of faulty
piping constituted
physical injury to the
solar facility, and loss
of use of facility.
Arkansas Cooley v. St. Farm Fire &
Cas. Co., 2009 U.S. Dist.
LEXIS 97144 (E.D. Ark.
2009)
Home purchasers sued
prior owners, alleging
breach of contract,
misrepresentation,
and fraud.
Not property damage The alleged
nondisclosure,
misrepresentation, and
breach of contract were
not accidents that
resulted in property
damage, but rather, events
that caused economic
damages.
Geurin Contractors, Inc. v.
Bituminous Cas. Corp.,
636 S.W. 2d 638 (Ark. Ct.
App. 1982)
Business owner sued
highway contractor,
alleging negligent
performance of highway
contract caused road
closure and loss of
business.
Property damage Loss of use of tangible
property caused by an
occurrence constitutes
property damage.
Munich Re Construction Defect Resource Guide 23
Is there property damage?
State Citation Facts Finding Comments
California St. Paul Fire & Marine Ins.
Co. v. Vadnis Corp., 2012
U.S. Dist. LEXIS 29696
(E.D. Cal. 2012)
Town water district
alleged that defective
construction of pipeline
caused irrigation water to
be lost.
Not property damage While the definition of
property damage would
cover damages related to
the loss of use of the
water, the loss of water is
not insured.
Ameron Int’l Corp. v. Am.
Home Assurance Co.,
2011 Dist. LEXIS 61486
(C.D. Cal. 2011)
General contractor on
highway project sued
subcontractor, alleging
use of substandard
concrete resulted in the
failure of drill shafts and
project delays.
Property damage Allegations that the
supply of defective
concrete caused project
delays, resulting in
consequential damages,
constitutes property
damage as loss of use
of property.
McGranahan v. Ins. Corp.,
544 F. Supp. 2d 1052 (E.D.
Cal. 2008)
Developer asserted claims
against drywall installer,
alleging improper
installation of moldy
drywall.
Property damage Lot discounts,
concessions, and carrying
costs constitute property
damage since they arose
from defective drywall
installed by the insured.
F & H Constr. v. ITT
Hartford Ins. Co. of the
Midwest, 12 Cal. Rptr. 3d
896 (Cal. Ct.App. 2004)
Subcontractor sued for
supplying pipe caps for
driven piles determined to
be of inferior grade.
Not property damage Damages alleged by
contractor arose from cost
of modifying the caps and
lost bonuses, not covered
damages under the policy.
Allstate Ins. Co. v. Morgan,
806 F. Supp. 1460 (N.D.
Cal. 1992)
Home purchasers sued
seller for failing to
disclose issues.
Not property damage Claims seek economic
damages and do not
constitute property
damage under the policy.
N.H. Ins. Co. v. Vieira, 930
F.2d 696 (9th Cir. 1991)
Contractor sued for failing
to properly secure drywall
and install drywall in
attics to prevent fire.
Not property damage Diminution in value does
not constitute property
damage as defined by the
policy.
Maryland Cas. Co. v.
Reeder, 270 Cal. Rptr. 719
(Cal. Ct. App. 1990)
Owners sued developer
and builder, alleging that
settling of the slab, soil
subsidence caused
cracking and separation in
floor and walkways.
Property damage The allegations of defects
in material and
workmanship in project
allege property damage
within the meaning of the
policy.
St. Paul Fire & Marine Ins.
Co. v. Coss, 145 Cal. Rptr.
836 (Cal. Ct. App. 1978)
Contractor sued over
quality of work and was
removed from work site.
At the time of
discontinuance, neither
dwelling nor garage could
be used for the intended
purpose.
Not property damage The damages were costs
incurred to correct the
defective work. Poor
workmanship is not
property damage within
the terms of the policy.
Colorado Cool Sunshine Heating &
Air Cond., Inc. v. Am.
Family Mut. Ins. Co., 2014
U.S. Dist. LEXIS 174818
(D. Colo. 2014)
Policyholder sued
insurer for defense
in construction defect
case brought against it
by homeowner.
Not property damage When allegations do
not include damage to
“non-defective portion”
of insured’s work, no
property damage.
24 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Colorado TCD, Inc. v. Am. Family
Mut. Ins. Co., 296 P.3d
255 (Colo. Ct. App. 2012)
Developer sued insured
general contractor,
alleging defective roof
installation.
Not property damage Allegations sounding in
contract and tort do not fit
within the meaning of
property damage.
St. Paul Fire & Marine Ins.
Co. v. Alstom Power, Inc.,
2010 U.S. Dist. LEXIS
90016 (D. Colo. 2010)
Energy company sued
power plant contractor,
alleging defective welding
caused latent defects.
Not property damage Allegations that faulty
workmanship in the use
of improper materials
resulted in latent defects
does not constitute
property damage.
Am. Family Mut. Ins. Co. v.
Teamcorp., Inc., 659 F.
Supp. 2d 1115 (D. Colo.
2009)
Homeowners sued home
designer, asserting faulty
plans resulted in home
being uninhabitable.
Property damage Even if the complaint
could not be construed to
allege physical injury,
coverage arguably exists
for loss of use of tangible
property.
Colard v. Am. Fam. Mut.
Ins. Co., 709 P.2d 11 (Colo.
Ct. App. 1985)
Homeowners terminated
contract with contractor
because of negligent and
unsatisfactory
construction, requiring
other contractors to
correct and complete
construction.
Property damage The results of the
insured’s actions were
neither expected nor
intended, and the
unintended poor
workmanship of the
insured created an
exposure to a continuous
condition that resulted in
property damage.
Connecticut Capstone Bldg. Corp. v.
Am. Motorists Ins. Co., 67
A. 3d 961 (Conn. 2013)
Contractor sued for
defective construction of
university housing,
including water damage
and structural problems.
Property damage On certified questions,
court held that
unintended defects or
faulty workmanship
causing damage to
insured’s nondefective
work are property
damage.
Peterbilt of Conn., Inc. v.
First Fin. Ins. Co., 2011
U.S. Dist. LEXIS 106740
(D. Conn. 2011)
Building owner sued
insured roofing contractor,
alleging faulty
workmanship caused roof
to leak.
Possible property
damage
Damage caused to one
component of a system by
another component falls
within the meaning of
property damage.
Times Fiber Communs.,
Inc. v. Travelers Indem. Co.
of Ill., 2005 Conn. Super.
LEXIS 335 (Conn. Super.
Ct. 2005)
Telephone company sued
seller of cable, alleging
failure to meet building
code requirements
required removing and
replacing the cable.
Property damage Repairs to drywall
necessitated by removing
defective cable does not
constitute physical injury
to tangible property;
however, displacement of
tenants and lost rental
revenue constitutes loss
of use of tangible
property.
Florida Voeller Const., Inc. v.
Southerrn-Owners Ins.
Co., 2015 U.S. Dist. LEXIS
31176 (M.D. Fla. 2015)
Contractor sued for
building code violations
and warranty claims by
association.
Possible property
damage
Allegations that faulty
workmanship damaged
other property suicient
to trigger duty to defend.
Munich Re Construction Defect Resource Guide 25
Is there property damage?
State Citation Facts Finding Comments
Florida Amerisure Mut. Ins. Co. v.
Auchter Co., 673 F.3d
1294 (11th Cir. 2012)
Inn owner sued
contractor, alleging
defectively installed roof
was aesthetically deficient
and its repair would cause
lost profits.
Not property damage A claim for the cost of
repairing faulty roof does
not constitute a claim for
property damage.
Precise Constr., Inc. v. W.
Sur. Group, 417 Fed. Appx.
871 (11th Cir. 2011)
Building contractor
sued for costs incurred
in demolishing and
rebuilding a foundation
improperly installed
by subcontractor.
Not property damage Property damage under a
CGL policy does not
include costs associated
with removing and
replacing defective work.
Mid-Continent Cas. Co. v.
Frank Casserino Constr.,
Inc., 721 F. Supp. 2d 1209
(M.D. Fla. 2010)
General contractor sued
roofing subcontractor,
alleging construction
defects caused water
damage.
Property damage and
not property damage
Although subcontractor’s
defective workmanship
may have caused water
intrusion (and resulting
property damage to the
buildings), faulty
workmanship alone does
not constitute property
damage.
Mid-Continent Cas. Co. v.
Basdeo, 742 F. Supp. 2d
1293 (S.D. Fla. 2010)
Condominium association
and unit owner sued
roofing contractor for
water damage caused by
faulty roof repairs.
Property damage While costs for repairing
or removing defective
work are not covered by
the definition of property
damage, costs of repairing
damage caused by
defective work are.
Homes By Deramo, Inc. v.
Mid-Continent Cas. Co.,
661 F. Supp. 2d 1281 (M.D.
Fla. 2009)
Homeowner asserted
claim against building
contractor, alleging
construction defects in
deck installation.
Possible property
damage
There is a dierence
between a claim for the
cost of remediating
defective work (not
property damage), and a
claim for the cost of
repairing damage caused
by the defective work
(property damage).
Auto-Owners Ins. Co. v.
Pozzi Window Co., 984
So. 2d 1241 (Fla. 2008)
Homeowner sued
contractor after windows
installed in new home
leaked during rainstorms.
Property damage and
not property damage
Claim for the replacement
of defective windows does
not constitute injury to
tangible property, but
repair or replacement of
windows that were
damaged by defective
installation constitutes
physical injury to tangible
property.
U.S. Fire Ins. Co. v. J.S.U.B.,
Inc., 979 So. 2d 871 (Fla.
2007)
Subcontractor’s use
of poor soil and
inadequate compacting
caused damage to
foundation, drywall and
interior of home.
Property damage Structural damage to
completed homes caused
by subcontractor’s
defective work is property
damage.
26 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Florida W. Orange Lumber Co. v.
Ind. Lumbermens Mut.
Ins. Co., 898 So. 2d 1147
(Fla. Dist. Ct. App. 2005)
Contractor failed to use
proper grade of cedar
siding, requiring owner to
remove and replace with
substitute product.
Not property damage Breach of contract claims
are not property damage.
Georgia Transcon. Ins. Co. v. R.
Larry Phillips Constr. Co.,
376 Fed. Appx. 885 (11th
Cir. 2010)
Owner sued general
contractor for faulty
workmanship, causing
water seepage and rot.
Not property damage No property damage
alleged to have been
caused by an occurrence.
Glens Falls Ins. Co. v.
Donmac Golf Shaping
Co., 417 S.E. 2d 197 (Ga.
Ct. App. 1992)
Contractor sought
coverage after building
golf course partly in
protected wetlands
without necessary
permits.
Property damage Negligent construction on
wetlands caused losses
due to physical damage
and loss of use of the
project.
Hawaii Group Builders, Inc. v.
Admiral Ins. Co., 231 P. 3d
67 (Haw. Ct. App. 2010)
Hotel owner sued
finishing subcontractor,
alleging construction
defects caused mold and
closure of hotel.
Property damage The mold damage and
resulting loss of use of the
hotel qualifies as property
damage.
Illinois Milwaukee Mut. Ins. Co. v.
J.P. Larsen, Inc., 956 N.E.
2d 524 (Ill. App. Ct. 2011)
Condominium association
sued building contractor,
alleging damage caused
by leaking windows, and
contractor asserted third-
party claims against
insured subcontractor
hired to seal the windows.
Property damage The damages alleged
are not intangible or
associated with the repair
or replacement of the
faulty window caulking
and sealant.
Lagestee-Mulder, Inc. v.
Consol. Ins. Co., 2011 U.S.
Dist. LEXIS 129308 (N.D.
Ill. 2011)
Building owner sued
general contractor and
window/door
subcontractor, alleging
that defective
workmanship caused
water infiltration.
Property damage and
not property damage
While water damage to
building other than
windows and doors does
not qualify as property
damage, such work fell
outside the scope of the
subcontractor’s work and
qualified as property
damage.
W. Bend Mut. Ins. Co. v.
People, 929 N.E. 2d 606
(Ill. App. Ct. 2010)
Homeowners and the
Attorney General sued
remodeling company,
alleging fraud and faulty
workmanship.
Not property damage Finding coverage for the
cost of replacing or
repairing defective work
would transform the
policy into performance
bond.
Lyerla v. AMCO Ins. Co.,
536 F.3d 684 (7th Cir.
2008)
Homeowners sued
contractor, alleging
failure to recover costs
of completing home and
for project, storage fees,
finance charges and
other expenses.
Not property damage Breach of contract claims
did not allege physical
injury to tangible property.
Munich Re Construction Defect Resource Guide 27
Is there property damage?
State Citation Facts Finding Comments
Illinois Country Mut. Ins. Co. v.
Carr, 867 N.E 2d 1157 (Ill.
App. Ct. 2007)
Homeowners sued
contractor, alleging that
he or his subcontractor
negligently performed
backfill operations,
causing damage to the
basement walls.
Property damage The homeowners allege
physical injury to tangible
property, their basement
walls, which falls within
the definition of property
damage.
Viking Constr. Mgmt., Inc.
v. Liberty Mut. Ins. Co.,
831 N.E. 2d 1 (Ill. App. Ct.
2005)
A masonry wall collapsed
at a construction site,
injuring a worker who
sued for faulty bracing.
Not property damage Complaint alleged only
damages for repair or
replacement of defective
products, which does not
constitute property
damage.
Indiana Trinity Homes LLC v. Ohio
Cas. Ins. Co., 864 F.Supp.
2d 744 (S.D. Ind. 2012)
Homeowners sued
general contractor,
alleging faulty work
resulted in water damage
to their homes.
Property damage Physical injury to tangible
property qualifies as
property damage.
Cont’l Cas. Co. v.
Sycamore Springs
Homeowner’s Ass’n Inc.,
652 F.3d 804 (7th Cir.
2011)
Homeowners association
sued building contractor
for damages caused by
overflow of retention
pond.
Not property damage Because the damages
sought were for work that
would reduce future
flooding, as opposed to
the cost of restoring the
subdivision to its original
condition, claims were not
for property damage.
Amerisure, Inc. v. Wurster
Constr. Co., 818 N.E. 2d
998 (Ind. Ct. App. 2004)
Subcontractors installed
exterior sheathing and
finish systems for
construction projects that
required general
contractor to correct
defects in the work.
Not property damage Damage to the projects
due to faulty
workmanship or defective
materials does not involve
property damage.
R.N. Thompson & Assocs.,
Inc. v. Monroe Guar. Ins.
Co., 686 N.E. 2d 160 (Ind.
Ct. App. 1997)
Homeowners’ association
sued developer, alleging
improper ventilation.
Not property damage No property damage
where claim arises from
economic loss and not
from damage to property
other than the contractor’s
completed work itself.
Iowa Yegge v. Integrity Mut. Ins.
Co., 534 N.W. 2d 100
(Iowa 1995)
Homeowners sued
contractor for breach of
contract and warranty,
seeking damages to
complete work.
Not property damage The complaint sought
costs to complete work,
expenses, and
impairment, which did not
qualify as property
damage.
Kansas Fidelity & Deposit Co. of
Md. v. Hartford Cas. Ins.
Co., 189 F. Supp. 2d 1212
(D. Kan. 2002)
Claims for work
performed on school
project determined to
be defective, including
deteriorated walls, broken
blocks, cracked joints
and slabs and improper
drain lines.
Property damage Injury to the project
allegedly caused by the
insured’s faulty
workmanship is property
damage within the terms
of the policy.
28 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Kentucky Global Gear & Mach. Co.,
Inc. v. Capitol Indem.
Corp., 2010 U.S. Dist.
LEXIS 86745 (W.D. Ky.
2010)
Vessel owner sued repair
company, alleging
defective repair services
caused damage to other
parts of the boat and
damage to owner’s
reputation.
Not property damage Alleged injury to
reputation and goodwill,
does not allege physical
injury to tangible property
and, therefore, is not
property damage.
Louisiana Travelers Cas. and Sur.
Co. of Am. v. Univ.
Facilities, Inc., 2012 U.S.
Dist. LEXIS 49970 (E.D.
La. 2012)
Building developer sued
general contractor and
drywall subcontractor,
alleging faulty
workmanship in the
installation of wallboard.
Property damage Allegations that faulty
workmanship caused
water damage, the failure
of floor and wall systems,
and the permanent
deterioration of the
buildings constitute an
allegation of property
damage.
Martco Ltd. P’ship v.
Wellons, Inc., 2008 U.S.
Dist. LEXIS 98385 (W.D.
La. 2008), a’d, 312 Fed.
Appx. 716 (5th Cir. 2009),
a’d, 588 F. 3d 864 (5th
Cir.)
Building owner sued
contractor for damages
caused by breach of
contract and negligence.
Property damage Evidence presented by
plant owner established
property damage in the
form of physical injury to
property and loss of use.
Stewart Interior
Contractors, L.L.C. v.
Metal Pro Indus., L.L.C.,
969 So. 2d 653 (La. Ct.
App. 2007)
Framing subcontractor
sued subcontractor for
damages caused by use
of defective steel studs.
Property damage In addition to economic
losses, allegations of
damage to property,
other than to the steel
studs themselves, or
incidental to their
removal and repair,
constitutes allegations
of property damage.
Grimaldi Mech., L.L.C. v.
Gray Ins. Co., 933 So. 2d
887 (La. Ct. App. 2006)
Mechanical contractor
sought the cost of
defending claims against
it for damages resulting
from defective
installation of piping
system.
Possible property damage Because the complaint
alleges both breach of
contract and damages
resulting from breach,
there may have been an
occurrence and property
damage.
Maryland IA Constr. Corp. v. T&T
Surveying, Inc., 822 F.
Supp. 1213 (D. Md. 1993)
General contractor sued
subcontractor, alleging
that repairs to remedy
faulty work required
removal and replacement
of other nondefective
work.
Property damage Nothing to suggest
damages sustained by the
general contractor were
not for property damage.
Reliance Ins. Co. v.
Mogavero, 640 F. Supp.
84 (D. Md. 1986)
Owner of fire-damaged
apartment building sued
contractor for improper
renovation, including
openings in drywall,
insulation, inadequate
electric water heater
capacity and uninsulated
water pipes.
Not property damage Claims for damage were
incidental to the assertion
of defective work
performed by the insured
and did not constitute
property damage.
Munich Re Construction Defect Resource Guide 29
Is there property damage?
State Citation Facts Finding Comments
Massachusetts Essex Ins. Co. v.
BloomSouth Flooring
Corp., 562 F.3d 399 (1st
Cir. 2009)
Tenant sought damages
from contractors for
installation of odor-
emitting carpeting.
Property damage Odor can constitute
physical injury to property
and loss of use, both
constituting property
damage.
Friel Luxury Home Constr.,
Inc. v. Probuilders
Specialty Ins. Co. RRG,
2009 U.S. Dist. LEXIS
121775 (D. Mass. 2009)
Homeowners sued,
alleging contractor’s
faulty workmanship
resulted in costs and
damages.
Not property damage The homeowners’ claim
did not allege faulty work
constituted physical injury
to their home, thus no
property damage within
the meaning of the policy.
Davenport v. U.S. Fid. &
Guar. Co., 778 N.E. 2d
1038 (Mass. App. Ct.
2002) (unpublished)
Painting subcontractor
sued for failing to apply a
primer before final coat of
exterior paint, resulting in
peeling and flaking.
Not property damage The cost of repairing
defective work does not
constitute property
damage.
Michigan Houseman Constr. Co. v.
Cincinnati Ins. Co., 2010
U.S. Dist. LEXIS 39961
(W.D. Mich. 2010)
Store owner sued general
contractor, alleging
construction defects
caused the store’s floor to
sink.
Property damage Property damage is
alleged if the insured’s
work physically
deteriorates.
Minnesota Remodeling Dimensions,
Inc. v. Integrity Mut. Ins.
Co., 806 N.W. 2d 82
(Minn. Ct. App. 2011)
Homeowners sued
contractor, alleging
negligent failure to inform
them of pre-existing
moisture damage visible
during remodeling.
Not property damage No property damage
because the moisture
damage was pre-existing
and not traceable to the
insured contractor.
Grinnell Mut. Reinsurance
Co. v. Wollak Const., Inc.,
2010 U.S. Dist. LEXIS
110036 (Dist. Minn. 2010)
Homeowners sued
general contractor,
alleging that negligent
construction diminished
value of home.
Not property damage Diminution in value does
not constitute property
damage.
Grinnell Mut. Reinsurance
Co. v. Ripley, 2009 Minn.
App. Unpub. LEXIS 1349
(Minn. Ct. App. 2009)
Homeowners sued builder
for repair costs, alleging
faulty construction
caused their home to
flood.
Property damage Injuries could constitute
property damage, since
the insured might become
obligated to pay for
“physical injury to
tangible property.”
Federated Mut. Ins. Co. v.
Concrete Units, Inc., 363
N.W. 2d 751 (Minn. 1985)
Claims against contractor
for pre-mixed concrete in
construction of grain
elevator, allegedly causing
damage to the concrete
when the forms were
moved, damage to the
forms and reinforcing
rods and loss of use.
Property damage in part The cost of replacing
defective concrete not
property damage, but the
lost use of the grain
elevator and the damaged
rods and forms constitute
property damage.
Mississippi Nationwide Mut. Fire Ins.
Co. v. Hayes, 2010 U.S.
Dist. LEXIS 92988 (S.D.
Miss. 2010)
Homeowner sued
construction company,
asserting breach of
contract and negligent
construction claims.
Property damage Breach of contract
alleged to have caused
both physical damage
to tangible property
and loss of use, is
property damage.
30 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Missouri The Village at Deer Creek
Homeowners Ass’n. v.
Mid-Continent Cas. Co.,
432 S.W. 3d 231 (Mo. Ct.
App. 2014)
Homeowners sustained
substantial water damage
as the result of defective
construction.
Property damage The court found that the
cost of repairing
defectively installed
exterior cladding, as well
as the resulting water
damage, were both
covered property damage.
Esicorp, Inc. v. Liberty
Mut. Ins. Co., 266 F.3d
859 (8th Cir. 2001)
Contractor purchased
steel pipe for construction
of hydroelectric plant.
Inspections later revealed
defects in the welding,
requiring repair and
replacement.
Not property damage The defectively welded
pipe sections did not
collapse, burst, or cause
injury to the property as
a result of the insured’s
negligent inspection.
The cost of repairing
the defective welds
was not considered
property damage.
Taylor-Morley-Simon, Inc.
v. Michigan Mut. Ins. Co.,
645 F. Supp. 596 (E.D.
Mo. 1986), a’d, 822 F.2d
1093 (1987)
Concrete slab in new
residential construction
caused walls and ceilings
to crack, water lines and
gas lines to stress, and
heating and
air-conditioning ducts to
tear.
Property damage The cracking of walls,
ceilings, and floors, the
stress on water and gas
lines, and the loosening
of ducts throughout the
home, constitute physical
damage to tangible
property.
Montana Penn-Star Ins. Co. v.
Coyote Ridge Constr., Inc.,
2012 U.S. Dist. LEXIS
24882 (D. Mont. 2012)
Homeowners sued
contractor for
misrepresentation and
failure to complete the
construction.
Possible property damage There is at least a
possibility that the
homeowners suered
property damage
resulting from the loss
of use of their home.
Haskins Constr., Inc. v.
Mid-Continent Cas. Co.,
2011 U.S. Dist. LEXIS
127231 (D. Mont. 2011)
Homeowners sued
construction company,
alleging faulty
workmanship caused
numerous defects in
construction.
Property damage Allegations of failing
to install settling devices,
defectively installed
doors and windows
and the like are
property damage.
King v. State Farm Fire &
Cas. Co., 2010 U.S. Dist.
LEXIS 49029 (D. Mont.
2010)
Log home purchaser sued
manufacturer and sales
agent, alleging
construction package had
numerous deficiencies.
Not property damage The purchaser’s claim
does not assert any
property damage because
the acts giving rise to the
claims do not include
physical injury to or
destruction of property.
Nebraska Auto-Owners Ins. Co. v.
Home Pride Ins. Cos., 684
N.W. 2d 571 (Neb. 2004)
Owner of apartment
buildings alleged that
roofing shingles were
improperly installed,
causing damage to roof
structures and buildings,
as well as use of defective
shingles.
Property damage Claimants alleged that
shingles were breaking
apart and falling, resulting
in damage to the roof
structures and buildings.
Such allegations stated
cause for physical injury
to tangible property.
Munich Re Construction Defect Resource Guide 31
Is there property damage?
State Citation Facts Finding Comments
Nevada Aetna Cas. & Sur. Co. v.
McIbs, Inc., 684 F. Supp.
246 (D. Nev. 1988)
Cement block
manufacturer produced
blocks that were
improperly sized for
project and which
were covered by stucco
and plaster, to cover
other defects.
Not property damage Increased labor costs and
the cost of the plaster and
stucco do not constitute
property damage because
there was no evidence of
physical injury or
destruction of any
property on the project
caused by the blocks.
New
Hampshire
Webster v. Acadia Ins. Co.,
934 A.2d 567 (N.H. 2007)
School sued contractor,
alleging defective roof
installation required
replacement and repair
of existing components.
Property damage Because the school claims
damage to existing ceiling
beams beyond the
defective roof
replacement, the claim
satisfies the definition of
property damage.
M. Mooney Corp. v. U.S.
Fid. & Guar. Co., 618 A.2d
793 (N.H. 1992)
Chimney fire in a new
condo development
revealed inadequate
clearance between the
fireplace and wood
framing. Insurer covered
costs of repairing actual
damage, but denied
claims to correct the
condition in units that
were not burned or
charred.
Property damage The loss of use of
fireplaces falls within the
definition of property
damage and was a direct
result of the fire.
Hull v. Berkshire Mut. Ins.
Co., 427 A.2d 523 (N.H.
1981)
Claims asserted against
contractor discharged
during construction who
was then sued for
defective work performed.
Not property damage Plaintis did not allege
property damage because
the claim was for money
damages to compensate
for contractor’s defective
work.
New Jersey Firemen’s Ins. Co. of
Newark v. Nat‘l Union Fire
Ins. Co., 904 A.2d 754
(N.J. App. Div. 2006)
Association sued
developer and builder,
alleging defects in the
construction of
condominium units.
Not property damage Property damage does not
include the cost of
repairing faulty
workmanship.
Cypress Point Condo.
Ass’n v. Adria Towers,
L.L.C., 2015 N.J. Super.
LEXIS 114 (App. Div. 2015)
Homeowners Association
sued developer,
developer’s insurers and
subcontractors for
consequential property
damage caused by
defective work.
Property damage Where claim centers on
the cost of damage to
common areas and
individual units, rather
than defective roofing and
related work, there is
policy–defined property
damge.
New Mexico Sadler v. Pac. Indem. Co.,
363 Fed. Appx. 560 (10th
Cir. 2010)
Home purchasers
sued sellers, alleging
intentional, negligent
and innocent
misrepresentation
of home’s condition.
Not property damage The buyers’ claims for
misrepresentation
resulted in economic loss,
not physical damage to
property and claims
alleging the home was
uninhabitable do not
constitute loss of use
of tangible property.
32 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
New York Franco Belli Plumbing &
Heating & Sons, Inc. v.
Liberty Mut. Ins. Co., 2012
U.S. Dist. LEXIS 56761
(E.D. N.Y. 2012)
General contractor sued
subcontractor for cost of
repairing a defective gas
pipe installed by
subcontractor.
Not property damage While walls were torn
down in order to access
and repair the pipes, this
damage was not caused
by the defective condition,
but required to remedy it.
New York Bonded Concrete, Inc. v.
Transcon. Ins. Co., 784
N.Y.S. 2d 212 (N.Y. App.
Div. 2004)
General contractor sued
for supplying defective
concrete for use in
sidewalks on a school
renovation project.
Not property damage The claim asserted that
the contractor provided
allegedly defective
concrete and the damages
sought were the cost of
correction, not damage to
property other than the
completed work itself.
Jakobson Shipyard, Inc. v.
Aetna Cas. & Sur. Co., 961
F.2d 387 (2d Cir. 1992)
Purchaser of tugboats
sued manufacturer,
alleging defective steering
apparatus and claiming
costs of temporary and
permanent repair.
Not property damage The complaint alleged
that the insured’s work
product did not perform
according to contract
specifications and the
damages were to the tugs
themselves. No damage to
the property or persons of
third parties was alleged
or proven.
North Carolina Nat’l Union Fire Ins. Co. of
Pittsburg, Pa. v.
Intercoastal Diving, Inc.,
2012 U.S. Dist. LEXIS
76291 (E.D. N.C. 2012)
Condominium association
sued general contractor,
asserting bulkhead
construction suered
from numerous defects.
Possible property damage Damage to other than the
bulkhead caused by the
insured’s defective work,
could constitute property
damage caused by an
occurrence.
Builders Mut. Ins. Co. v.
Mitchell, 709 S.E. 2d 528
(N.C. Ct. App. 2011)
Homeowner sued
contractor hired to make
home repairs, alleging
faulty workmanship
caused further water
damage.
Possible property damage Property damage means
damage to property that
was previously
undamaged and not the
expense of repairing
property or completing
work that was done
incorrectly.
Breezewood of
Wilmington Condo.
Homeowners Ass’n, Inc. v.
Amerisure Mut. Ins. Co.,
335 Fed. Appx. 268 (4th
Cir. 2009)
Condominium association
sued general contractor,
alleging defects in
construction and design
necessitated repairs and
reconstruction of major
portions of the common
elements.
Not property damage The cost of repair or
replacement of faulty
workmanship is not
property damage, nor is
damage to the insured’s
own work caused by such
faulty workmanship.
Amerisure Mut. Ins. Co. v.
Superior Constr. Corp.,
2008 U.S. Dist. LEXIS
62458 (W.D. N.C. 2008)
Condominium association
sued general contractor,
seeking to recover costs
of repairing construction
defects caused by a
subcontractor’s faulty
workmanship.
Property damage Damages to upgraded
portions of condominiums
that occurred after
insured had finished
construction would be
within the meaning of
property damage.
Munich Re Construction Defect Resource Guide 33
Is there property damage?
State Citation Facts Finding Comments
North Carolina Travelers Indemn. Co. v.
Miller Bldg. Corp., 221
Fed. Appx. 265 (4th Cir.
2007)
Developer sued general
contractor hired to
construct a hotel, alleging
numerous construction
defects.
Property damage and not
property damage
The cost of correcting the
insured’s work does not
constitute property
damage, but damages to
the owner’s own property
that was separate from
the hotel, does constitute
property damage.
ABT Bldg. Prod. Corp. v.
Nat’l Union Fire Ins. Co. of
Pittsburgh, Inc., 472 F.3d
99 (4th Cir. 2006)
Homeowners sued
hardboard siding
manufacturer, alleging
defective because siding
absorbed moisture and
prematurely deteriorated.
Property damage and
not property damage
While the cost of
replacing the defective
product does not
constitute covered
property damage,
consequential damages
suered by the homes
upon which the siding
was aixed is covered.
Prod. Sys. Inc. v.
Amerisure Ins. Co., 605
S.E. 2d 663 (N.C. Ct. App.
2004)
Contractor was hired to
design and install oven
lines in manufacturing
plant but use of defective
bolts impaired operation.
Not property damage No property damage
because the claim was to
repair the defects caused
by faulty workmanship.
Ohio Ohio Cas. Ins. Co. v.
Hanna, 2008 Ohio 3203
(Ohio Ct. App. 2008)
Homeowners sued
construction company,
alleging faulty framing
created several other
problems with house.
Property damage The physical injury that
triggered coverage was
not the cosmetic changes
to the home’s drywall, trim
and doors, but the faulty
workmanship of the
insured causing the frame
of the house to sag.
Erie Ins. Exch. v. Colony
Dev. Corp., 736 N.E. 2d
941 (Ohio Ct. App. 1999)
Condo association sued
developer for damages to
units, common areas, and
surrounding landscape,
arising out of design and
construction of complex.
Property damage Allegations that a building
contractor breached its
duty to construct or
design a building in a
workmanlike manner, are
suicient to invoke the
general coverage
provision for property
damage caused by an
occurrence.
Oklahoma Boggs v. Great N. Ins. Co.,
659 F. Supp. 2d 1199 (N.D.
Okla. 2009)
Home purchasers sued
sellers claiming fraud,
misrepresentation and
negligence, in connection
with improperly
constructed fireplaces.
Not property damage The purchasers’ claims
are economic in nature
and do not constitute
property damage.
Oregon Willmar Dev., LLC v. Ill.
Nat’l Ins. Co., 2011 U.S.
App. LEXIS 25854 (9th
Cir. 2011)
Homeowners alleged
damage to their home
was caused by
contractor’s negligent site
selection and
construction.
Property damage The damage resulting
from the builder’s
negligent performance –
damage from the settling
of the foundation –
constitutes property
damage.
34 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Oregon State Farm Fire & Cas. Co.
v. Am. Family Mut. Ins.
Co., 253 P.3d 65 (Or. Ct.
App. 2011)
Homeowners sued
builder, alleging negligent
installation of EIFS.
Not property damage None of the allegations
assert water damage to
the components or
contents of the residence,
or beyond the EIFS itself.
Cal. Ins. Co. v. Stimson
Lumber Co., 2004 U.S.
Dist. LEXIS 10098 (D. Or.
2004), a’d in part, 325
Fed. Appx. 496 (9th Cir.
2009)
Homeowners sued
manufacturer, asserting
warranty and repair
claims related to defective
siding product.
Not property damage Absent a showing that
physical damage was
caused to a claimant’s
property as a result of the
defective siding, the
manufacturer cannot
recover the costs
associated with repairing
or replacing the defective
siding.
Pennsylvania Prudential Prop. & Cas.
Ins. Co. v. Boyle, 305 Fed.
Appx. 35 (3d Cir. 2008)
(unpublished)
Buyers sued home seller
after discovering rot
inside the exterior siding
and other defects, alleging
breach of implied
warranty of habitability.
Not property damage A claim for breach of an
implied warranty of
habitability is not a claim
for property damage.
Wausau Underwriters Ins.
Co. v. State Auto. Mut. Ins.
Co., 557 F. Supp. 2d 502
(D.N.J. 2008) (applying
Pa. law)
Condominium association
sued stone manufacturer
as a result of deteriorating
stone fascia applied to the
outside units.
Possible property damage Damage allegedly caused
by the negligent acts of
the insured may be a
suiciently fortuitous
event to constitute an
accident and therefore an
occurrence.
Rhode Island Furey Roofing & Constr.
Co., Inc. v. Emp’rs Mut.
Cas. Co., 2010 R.I. Super.
LEXIS 24 (R.I. Super. Ct.
2010)
Building contractor sued
roofing subcontractor
seeking damages
resulting from defective
work and failure to obtain
warranty.
Property damage Property damage is
alleged because damage
from roof leaks may
require repair to the roof,
and the work of others.
Aetna Cas. & Sur. Co. v.
Consulting Envtl. Eng’rs,
Inc., 1989 R.I. Super.
LEXIS 137 (R.I. Super. Ct.
1989)
Installer of manhole
covers and pipes on a
sewer project brought
claims against design
engineers for improper
grading specifications.
Property damage Tangible property does
not need to be destroyed
to be injured. It will suice
if it is or becomes so
damaged as to be
inoperable.
South Carolina Jessco, Inc. v. Builders
Mut. Ins. Co., 2009 U.S.
Dist. LEXIS 86920 (D.S.C.
2009), a’d in part, 2012
U.S. App. LEXIS 6502
(4th Cir. 2012)
Homeowners sued
contractor, alleging
defects in home
construction.
Property damage and not
property damage
Failure to repair faulty
work does not constitute
property damage, but the
flooding of the
homeowner’s yard is
property damage because
it has caused loss of use
of their yard and damage
to garage.
Munich Re Construction Defect Resource Guide 35
Is there property damage?
State Citation Facts Finding Comments
South Carolina Builders Mut. Ins. Co. v.
Oak Tree Homes, Inc.,
2012 U.S. Dist. LEXIS
49333 (D.S.C. 2012)
Homeowners sued
construction company,
alleging breach of
contract for defective
construction and for fraud
for representing that a
home warranty would be
provided.
Property damage and not
property damage
Defective construction
resulting in damage to
otherwise nondefective
components may
constitute property
damage, but the defective
construction would not.
Builders Mut. Ins. Co. v.
Lacey Constr. Co., Inc.,
2012 U.S. Dist. LEXIS
41588 (D.S.C. 2012)
Homeowners association
sued developer and
contractor for defects in
the construction of
common elements and
townhomes.
Property damage and
not property damage
A claim for the costs of
repairing damage caused
by defective work is not a
claim for property
damage, but a claim for
the cost of repairing
damage caused by the
defective work is a claim
for property damage.
Crossman Cmtys. of N.C.,
Inc. v. Harleysville Mut.
Ins. Co., Inc., 717 S.E. 2d
589 (S.C. 2011)
Condominium owners
sued developer, alleging
negligent construction of
exterior components,
resulting in progressive
water damage to
otherwise nondefective
portions.
Property damage and
not property damage
Defective construction
resulting in damage to
otherwise nondefective
components may
constitute property
damage, but the defective
construction itself would
not.
Isle of Palms Pest Control
Co. v. Monticello Ins. Co.,
459 S.E. 2d 318 (S.C. Ct.
App. 1994)
Home purchaser sued
pest contractor, claiming
negligent inspection,
fraud and breach of
contract.
Property damage Complaint alleged that
insured failed to find
termites in home,
requiring purchaser to
incur costs to stop
termites from damaging
home.
South Dakota Corner Constr. Co. v. U.S.
Fid. & Guar. Co., 638 N.W.
2d 887 (S.D. 2002)
Claims by school district,
alleging design and
construction defects in
general contractor’s and
subcontractors’ work.
Property damage and
not property damage
To the extent a
subcontractor’s work
caused damage to other
property, including the
work of the insured
general contractor,
coverage is aorded.
Tennessee Forrest Constr., Inc. v.
Cincinnati Ins. Co., 728 F.
Supp. 2d 955 (M.D. Tenn.
2010)
Homeowners sued home
contractor, alleging faulty
workmanship that caused
cracking in the
foundation.
Property damage Complaint allegations
leave open the possibility
that poorly constructed
foundation caused
damage to the rest of the
house, and property
damage occurs when one
component of a finished
product damages another
component.
36 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Tennessee Travelers Indem. Co. of
Am. v. Moore & Assocs.,
Inc., 216 S.W. 3d 302
(Tenn. 2007)
Claims against window
subcontractor allege a
negligent design,
supervision and
installation, resulting in
water and moisture
penetration, and
premature deterioration of
and damage to other
portions of structure.
Property damage The claim was not limited
to faulty workmanship
and alleged the defective
installation resulted in
water penetration causing
further damage.
Texas American Home Assur.
Co. v. Oceaneering Int’l.
Inc., 2015 U.S. App. LEXIS
6867 (5th Cir. 2015)
Use of faulty bolts to
repair ship’s hull required
replacement with
conforming bolts at a cost
of some $3 million.
Not property damage No property damage for
replacing non-conforming
bolts where no evidence
such bolts caused
damage to other aspects
of ship.
Mid-Continent Cas. Co. v.
Academy Dev., Inc., 2012
U.S. App. LEXIS 8056
(5th Cir. 2012)
Homeowners sued
developer and builder of
waterfront community for
diminution in property
value, alleging that the
walls of lakes were failing.
Property damage Allegations of diminution
in the value of homes
caused by defectively
constructed lakes
constitute property
damage.
Bldg. Specialties, Inc. v.
Liberty Mut. Fire Ins. Co.,
712 F. Supp. 2d 628 (S.D.
Tex. 2010)
Homebuilder sued HVAC
subcontractor, alleging
subcontractor’s defective
work caused water
damage.
Not property damage Because the petition did
not allege that the
defective work caused
physical injury and loss of
use, it did not allege
property damage.
Landstar Homes Dallas,
Ltd. v. Mid-Continent Cas.
Co., 2010 U.S. Dist. LEXIS
131516 (N.D. Tex. 2010)
Homeowner sued
homebuilder, alleging
damages to home as a
result of defective
foundation.
Property damage Awards for diminution in
value and cosmetic
repairs constitute
property damage because
they are physical injuries
to tangible property.
Sigma Marble & Granite –
Houston, Inc. v. Amerisure
Mut. Ins. Co., 2010 U.S.
Dist. LEXIS 137096 (S.D.
Tex. 2010)
General contractor sued
subcontractor, alleging
faulty stone work
increased costs and
delayed completion.
Property damage Physical injury to tangible
property, including the
resulting loss of use of
property, constitutes
property damage.
Pine Oak Builders, Inc. v.
Great Am. Lloyds Ins. Co.,
279 S.W. 3d 650 (Tex.
2009)
Homeowners sued
builder, alleging defective
construction caused
water damage to homes.
Property damage A claim of faulty
workmanship against a
homebuilder is a claim for
property damage caused
by an occurrence under a
CGL policy.
Lamor Baptist Church of
Arlington, Inc. v. St. Paul
Fire and Marine Ins. Co.,
2009 U.S. Dist. LEXIS
9470 (N.D. Tex. 2009)
Church sued building
contractor hired to
construct addition,
alleging the roof was
faulty and leaked.
Property damage and
not property damage
The cost of replacing the
roof installed by a
subcontractor is not
property damage, but the
water leak damage to the
ceiling tiles and carport is
property damage.
Munich Re Construction Defect Resource Guide 37
Is there property damage?
State Citation Facts Finding Comments
Texas Lamar Homes, Inc., v. Mid-
Continent Cas. Co., 242
S.W. 3d 1 (Tex. 2007)
Home buyers sued
developer, alleging latent
defects in foundations.
Property damage Negligent design and
construction of
foundation and defective
workmanship caused the
sheetrock and stone
veneer to crack, which
constitutes physical injury
to tangible property.
Lennar Corp. v. Great Am.
Ins. Co., 200 S.W. 3d 651
(Tex. App. 2006)
Application of synthetic
stucco to numerous
homes caused water to be
trapped behind it, causing
wood rot, mold, and
termite infestation.
Builder then sued for
costs of remediation.
Property damage and
not property damage
The stucco’s entrapment
of moisture caused water
damage, which
constitutes physical injury
to tangible property. The
costs to remove and
replace the synthetic
stucco as a preventative
measure does not
constitute property
damage.
Washington Big Constr., Inc. v. Gemini
Ins. Co., 2012 U.S. Dist.
LEXIS 71350 (W.D. Wash.
2012)
Homeowners sued
homebuilder, alleging
incomplete,
nonconforming, and
unsatisfactory work
resulted in additional
construction expenses
and diminution in value.
Not property damage For faulty workmanship to
give rise to property
damage, there must be
property damage separate
from the defective
product itself.
Mut. of Enumclaw Ins. Co.
v. T & G Constr., Inc. 199
P.3d 376 (Wash. 2008)
General contractor of
condominium project
sued siding contractor,
alleging improperly
installed siding caused
damage to subsurface
and interior walls.
Property damage Damage to subsurface
and interior walls not
installed by the insured
was property damage,
and removing and
repairing the siding is part
of the cost of repairing the
damage to the interior
walls.
Diamaco, Inc. v. Aetna
Cas. & Sur. Co., 983 P.2d
707 (Wash. Ct. App. 1999)
The City of Seattle sued
contractor, alleging
defects in the insured’s
work delayed completion
of a highway project.
Property damage Property damage is not
limited to damage to
third-party property.
Yakima Cement Prod. Co.
v. Great Am. Ins. Co., 608
P.2d 254 (Wash. 1980)
Building contractor sued
manufacturer of concrete
wall panels, alleging
concrete panels were
defective, requiring
removal and repair.
Not property damage No property damage was
alleged because there was
no evidence that the
incorporation of the
defective panels
diminished the value of
the building.
West Virginia Simpson-Littman Constr.,
Inc. v. Erie Ins. Prop. &
Cas. Ins. Co., 2010 U.S.
Dist. LEXIS 95378 (S.D.
W.Va. 2010)
Homeowner sued
contractor for damages to
home resulting from
negligent site and
masonry work.
Property damage The structural defects to
the home constitute
physical injury to or
destruction of tangible
property.
38 Munich Re Construction Defect Resource Guide
Is there property damage?
State Citation Facts Finding Comments
Wisconsin Acuity, a Mut. Ins. Co. v.
VPP Group, LLC, 810 N.W.
2d 812 (Wis. Ct. App.
2012)
Plant owner’s insurer filed
subrogation action
against insured
contractor, alleging faulty
excavation work caused
soil settling and damage
to existing plant.
Property damage The damage to the plant’s
engine room, roof and the
resulting damage to the
equipment is plainly
physical injury to tangible
property.
Wisconsin Stuart v. Weisflog’s
Showroom Gallery, Inc.,
753 N.W. 2d 448 (Wis.
2008)
Homeowners claimed
damages resulting
from alleged
misrepresentations
and construction
defects, related to
remodeling project.
Property damage Damage to the
homeowners’ property
that came after, and
was caused by, the
insureds’ statutory
misrepresentations,
constitutes property
damage.
Tweet v. Liberty Mut. Fire
Ins. Co., 2007 U.S. Dist.
LEXIS 9262 (E.D. Wis.
2007)
Plumbing subcontractor
sought coverage for the
cost of removing and
replacing pipe valves
which were defective, but
had not yet leaked.
Not property damage Physical injury does not
occur until it is caused by
the defective component.
Am. Fam. Mut. Ins. Co. v.
Am. Girl, Inc., 673 N.W. 2d
65 (Wis. 2004)
Soil engineering
subcontractor provided
faulty site preparation
advice resulting in
structural damage.
Property damage The sinking, buckling, and
cracking of the warehouse
was plainly physical injury
to tangible property.
Kalchthaler v. Keller
Constr. Co., 591 N.W. 2d
169 (Wis. Ct. App. 1999)
Building leaked causing
water damage to interior.
Property damage Ruined drapery and
wallpaper caused by
water entering leaky
windows is physical injury
to tangible property.
Munich Re Construction Defect Resource Guide 39
Coverage trigger
Trigger of coverage relates to when injury or damage is deemed to have taken place, so as to
potentially implicate a particular policy period. Construction defect claims typically do not
arise from a discrete or catastrophic event, but more frequently, latent or progressive damage
that may take place over an extended period of time.
Courts have adopted several dierent theories for determining when an event triggering
coverage occurs and which policies may respond. The four familiar trigger theories developed
in other long-tail claims that are typically molded to construction defect losses include:
Exposure
Each insurance policy on the risk during damage to property is triggered.
Manifestation
The insurance policy on the risk when property damage is discovered is triggered.
Injury-in-fact
Circumstance where each insurance policy on the risk when covered property damage
occurs is triggered. May begin upon first exposure or damage through to manifestation.
Continuous Trigger
All insurance policies on the risk beginning at the time of first property damage through
the date of manifestation are triggered.
The following is a summary of selected cases addressing trigger theories which have been
applied in a construction defect setting. Some states have reported cases dealing only with
similar latent exposures such as environmental, asbestos, or other toxic tort fact patterns, in
which case we have included those decisions.
40 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Alabama Essex Ins. Co. v. J&J
Masonry, LLC, 2015
U.S. Dist. LEXIS 11725
(N.D. Ala. 2015)
Construction
defect
Various construction
defect claims by
homeowners against
contractor.
Manifestation Policy in eect when
damage occurred, rather
than when work was
performed, is triggered.
Cincinnati Ins. Co. v.
Amerisure Ins. Co.,
2012 U.S. Dist. LEXIS
129953 (S.D. Ala.
2012)
Construction
Defect
Water infiltration
caused balconies
to sag requiring
extensive repair.
Injury-in-fact The occurrence
happened when the
balconies actually began
to sag, not as water
damage may have
weakened the structures
over time.
Safety Nat’l Cas.
Corp. v. Shook &
Fletcher Insulation
Co., No. CV-93-01574
(Ala. Cir. Ct., Jeerson
Cty., Mar. 5, 1999),
reprinted in 13
Mealey’s Ins. Litig.
Rep. No. 21 (Apr. 6,
1999)
Asbestos BI Insured sought
coverage for bodily
injury claims arising
from asbestos-
containing products it
manufactured.
Exposure Coverage is triggered
when claimant is actually
exposed to insured’s
products; there is no
coverage for policies in
eect subsequent to
exposure.
Alabama Plating Co. v.
U.S. Fid. & Guar Co.,
690 So. 2d 331 (Ala.
1996)
Environ. PD Insured sought
coverage for cleanup
costs ordered by
Alabama Department
of Environmental
Management.
Injury-in-fact Court reairmed rule
that an occurrence is the
time insured became
injured (i.e., time when
pollution damaged soil
and groundwater).
Commercial Union
Ins. Co. v. Sepco Corp.,
765 F.2d 1543 (11th
Cir. 1985)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Exposure Court found that
undisputed medical
evidence supported the
exposure theory.
Alaska Mapco Alaska
Petroleum, Inc. v. Cent.
Nat’l Ins. Co. of
Omaha, 795 F. Supp.
941 (D. Alaska 1991)
Environ. PD Insured sought
coverage for
groundwater pollution
resulting from release
of crude oil.
Exposure Coverage is triggered
by exposure to
contaminants rather
than by manifestation
of the damage.
Arizona Lenner Corp. v. Auto-
Owners Ins. Co., 151
P.3d 538 (Ariz. Ct.
App. 2007)
Construction
defect
Insured developer
sought defense for
claims asserted
against it by
homeowners for
negligent
construction.
Continuous Insurers must provide
coverage for ongoing
property damage that
occurs during the policy
period, even if other
similar damages
preceded that damage.
Associated Aviation
Underwriters v. Wood,
98 P.3d 572 (Ariz. Ct.
App. 2004)
TCE BI Insured sought
coverage for bodily
injury claims resulting
from exposure to
groundwater
contaminated by TCE.
Continuous Coverage is triggered
under an accident policy
if, during the policy
period, claimants were
exposed to TCE, were
developing TCE-related
diseases, or manifested
fully developed
TCE-related diseases.
Munich Re Construction Defect Resource Guide 41
Coverage trigger
State Citation Types of Case Facts Finding Comments
Arkansas Unigard Sec. Ins. Co. v.
Murphy Oil USA, Inc.,
962 S.W. 2d 735 (Ark.
1998)
Environ. PD Insured sought
indemnification for
judgment arising from
contamination at
leased facility.
Injury-in-fact Coverage is triggered
if insured was legally
obligated to pay
damages due to property
damage or actual injury
during the policy period;
there is no coverage for
damages incurred for
other reasons (i.e.,
indemnification for
compensatory damages
based on breach of
lease).
California Cal. v. Cont. Ins. Co.,
2012 Cal. LEXIS 7324
(Cal. 2012)
Environ. PD State of California
sought indemnity
from several insurers
in connection with
the cleanup of a
waste site.
Continuous That all policies were
covering the risk at some
point during the property
loss is enough to trigger
the insurers’ indemnity
obligation.
Acceptance Ins. Co. v.
Am. Safety Risk
Retention Group, 2011
U.S. Dist. LEXIS 88101
(S.D. Cal. 2011)
Construction
defect
Insured sought
contribution from
other insurers for
the cost of defending
insured roofing
contractor against
construction
defect claims.
Manifestation The relevant inquiry to
determining coverage
potential is whether
there was a possibility
that any property
damage first manifested
itself during the policy
period.
Pa. Gen. Ins. Co. v. Am.
Safety Indem. Co, 111
Cal. Rptr. 3d 403 (Cal.
Ct. App. 2010)
Construction
defect
One insurer sued
another seeking
equitable contribution
for a portion of costs
paid to defend and
settle an underlying
construction defect
lawsuit.
Injury-in-fact The policy is reasonably
susceptible to the
interpretation that the
trigger of coverage was
damage to the property,
not the causal conduct,
and certain included
endorsements were
designed to obviate the
application of the
continuous trigger.
Fireman’s Fund Ins.
Co. v. Md. Cas. Co., 77
Cal. Rptr. 2d 296 (Cal.
Ct. App. 1998)
Construction
defect
One insured sought
contribution from
another for the cost of
defending and settling
construction defect
claims.
Continuous The entire period of
injury was deemed a
single continuous loss.
Montrose Chem. Corp.
v. Admiral Ins. Co., 913
P.2d 878 (Cal. 1995)
Environ. PD Insured sought a
defense to lawsuits
including pollution
from the disposal of
waste at landfills.
Continuous Bodily injury or property
damage that is
continuously or
progressively
deteriorating throughout
several policy periods is
potentially covered by all
policies in eect during
those periods.
42 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Colorado United Fire & Cas. Co.
v. Boulder Plaza
Residential, LLC, 633
F.3d 951 (10th Cir.
2011)
Construction
defect
General contractor
sought coverage as an
additional insured
under policy issued to
its flooring
subcontractor for
claims regarding
defective flooring
installation.
Manifestation The physical
manifestation of damage
and not improper
installation or other
faulty workmanship is
the trigger for coverage.
Am. Family Mut. Ins.
Co. v. Teamcorp., Inc.,
659 F. Supp. 2d 1115
(D. Colo. 2009)
Construction
defect
Insured home
designer sought a
defense of claims
asserted against it for
design defects.
Injury-in-fact The time of the
occurrence of an
accident is not the time
the wrongful act was
committed, but the time
when the complaining
party was actually
damaged.
Hoang v. Assurance
Co. of Am., 149 P.3d
798 (Colo. 2007),
modified by, 2007
Colo. LEXIS 174 (Colo.
2007)
Construction
defect
Buyers of homes
sought to recover
from builder’s insurer
for construction
defects.
Injury-in-fact Coverage for injury or
damage occurring during
the policy period,
regardless of when the
claim is presented.
Village Homes of
Colo., Inc. v. Travelers
Cas. and Sur. Co., 148
P.3d 293 (Colo. Ct.
App. 2006), a’d, 155
P3d 369 (Colo. 2007)
Construction
defect
Homeowners sued
insured home builder,
alleging construction
defects related to
expansive soils.
Injury-in-fact An occurrence policy in
eect when injury or
damage happened may
provide coverage even
when a claim for the
injury or damage is not
made until years later.
Public Ser. Co. of Colo.
v. Wallis & Cos., 986
P.2d 924 (Colo. 1999)
Environ. PD Insured sought
coverage for costs
incurred for
environmental
cleanup.
Continuous Continuous trigger
applies due to
continuous and
progressive nature of
contamination.
Connecticut Travelers Cas. v. Neth.
Ins. Co., 2012 Conn.
Super. LEXIS 1460
(Conn. Super. Ct.
2012)
Construction
defect
One insurer sued
another, seeking to
recover costs incurred
in defending
construction defect
claims asserted
against insured
mason causing
ongoing water
damage.
Injury-in-fact The policyholder is
covered if an occurrence
causes damage during
the policy period; the
triggering point is the
time of the alleged injury.
Homesite Ins. Co. v.
Koch, 2007 Conn.
Super. LEXIS 274
(Conn. Sup. Ct. 2007)
Construction
defect
Insured sought
coverage for trespass
claims arising from
the alleged improper
installation of
electrical lines and
sewer pipes.
Injury-in-fact The injurious event need
not occur within the
policy period; rather, the
result of the injurious
event must occur during
the policy period.
Munich Re Construction Defect Resource Guide 43
Coverage trigger
State Citation Types of Case Facts Finding Comments
Connecticut Travelers Prop. Cas. of
Am. v. Laticrete Int’l,
Inc., 2006 Conn.
Super. LEXIS 2268
(Conn. Super. Ct.
2006)
Construction
defect
Hotel owner sued
insured contractor,
alleging defects in the
design and
construction of
bathroom showers,
resulting in water
damage to
surrounding areas.
Injury-in-fact The triggering event is
the water leaking from
the showers causing
physical injury to
tangible property, not the
installation of the
defective showers.
Delaware Hercules, Inc. v. AIU
Ins. Co., 784 A.2d 481
(Del. 2001)
Environ. PD Insured sought
coverage for cleanup
costs incurred at
several manufacturing
sites across the
country.
Continuous Continuous trigger
applies in cases where
long-term, gradual
damage such as
pollution, occurs at a
constant rate. Thus, any
policy in eect during the
entire injurious process
is triggered.
Hercules, Inc. v. Aetna
Cas. & Sur. Co., 1998
WL 962089 (Del.
Super. Ct. 1998)
Environ. PD Insured sought
coverage for pollution
arising from its
chemical
manufacturing plant.
Continuous A continuous trigger
applies to continuous
damage.
District of
Columbia
Wrecking Corp. of Am.
Va., Inc. v. Ins. Co. of N.
Am., 574 A.2d 1348
(D.C. 1990)
Construction
defect
Insured sought
coverage for property
damage caused by
collapsing wall.
Manifestation
and continuous
General rule is that
property damage occurs
at the time the damage is
discovered or when it
manifests. A limited
exception exists where
the damage can be
characterized as being
“continuous or
progressive” (i.e., leaking
pool pipe causing erosion
and saturation of
adjoining landfill slopes).
Keene Corp. v. Ins. Co.
of N. Am., 667 F.2d
1034 (D.C. Cir. 1981)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Continuous Bodily injury includes
any part of the injurious
process from exposure
through exposure in
residence to
manifestation.
Florida Carithers v.
Mid-Continent Cas.
Co., 2015 U.S. App.
LEXIS 5540 (11th Cir.
2015)
Construction
defect
Homeowners
obtained $90,000
judgment and
assignment of
builder’s rights
against insurer for
various defects in
construction.
Injury-in-fact In a limited holding, court
found no error in district
court’s application of
injury-in-fact trigger.
44 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Florida Voeller Constr., Inc. v.
Southern-Owners Ins.
Co., 2014 U.S. Dist.
LEXIS 61862 (M.D.
Fla. 2014)
Construction
defect
Homeowners’
association sued
builder for breach of
warranty and building
code violations.
Injury-in-fact Court found Trizec
decision persuasive since
policy required damage
during policy period, but
no requirement of actual
manifestation.
Trovillioon Cons’t. &
Dev., Inc. v.
Mid-Continent Cas.
Co., 2014 U.S. Dist.
LEXIS 6265 (M.D. FL.
2014)
Construction
defect
Insured general
contractor sought
coverage concerning
condominium defects.
Injury-in-fact Court noted disparate
treatment of trigger in
Florida cases, but
adopted injury-in-fact as
more consistent with
occurrence policies.
Axis Surplus Ins. Co. v.
Contravest Constr.,
Inc., 921 F. Supp. 2d
1268 (M.D. Fla. 2012)
Construction
defect
Insured contractor
sought coverage for
claims asserted by
condominium
association for
negligent
construction.
Injury-in-fact The damage itself must
occur during the policy
period for coverage to
be eective and there
is no requirement that
the damages manifest
during the period.
Mid-Continent Cas.
Co. v. Siena Home
Corp., 2011 U.S. Dist.
LEXIS 79132 (M.D. Fla.
2011)
Construction
defect
Insured developer
sought coverage for
homeowner claims
seeking damages for
water intrusion
caused by negligent
construction.
Manifestation The occurrence and
resulting coverage of
property damage under
a CGL policy is the
manifestation of
damage, not when the
alleged negligence
occurred.
Mid-Continent Cas.
Co. v. Frank Cassarino
Constr., Inc., 721 F.
Supp. 2d 1209 (M.D.
Fla. 2010)
Construction
defect
General contractor
sued insured
subcontractor hired to
perform roofing and
siding work, alleging
construction defects
caused water damage.
Manifestation Coverage under a CGL
policy is triggered when
property damage
manifests itself, not when
the negligent act or
omission giving rise to
the damage occurs.
Assurance Co. of Am.
v. Lucas
Waterproofing Co.,
Inc., 581 F.Supp. 2d
1201 (S.D. Fla. 2008)
Construction
defect
Insured subcontractor
sued by general
contractor as a
result of construction
defects in the
insured’s
waterproofing work
at a condominium
complex.
Manifestation Florida courts follow the
general rule that
coverage is triggered
when property damage
manifests itself, not when
the negligent act giving
rise to the damage
occurs.
Trizec Props., Inc. v.
Biltmore Constr. Co.,
767 F.2d 819 (11th Cir.
1985)
Construction
defect
Insured was accused
of negligent
construction of the
roof of a shopping
mall.
Injury-in-fact Actual damage must
occur during the policy
period for there to be
coverage.
Munich Re Construction Defect Resource Guide 45
Coverage trigger
State Citation Types of Case Facts Finding Comments
Georgia Arrow Exterminators,
Inc. v. Zurich Am. Ins.
Co., 136 F. Supp. 2d
1340 (N.D. Ga. 2001)
Environ. PD Insured sought
coverage for property
damage caused by
termites.
Continuous Where a policy defines
an occurrence as
including “continuous or
repeated exposure,” the
appropriate trigger is a
continuous one.
Briggs & Stratton
Corp. v. Royal Globe
Ins. Co., 64 F. Supp. 2d
1346 (M.D. Ga. 1999)
Environ. PD Insured sought
coverage for pollution
damage resulting
from the discharges of
waste water into
unlined surface
impoundments.
Exposure The exposure trigger of
coverage is applicable.
Boardman Petroleum,
Inc. v. Federated Mut.
Ins. Co., 926 F. Supp.
1566 (S.D. Ga. 1995),
rev’d on other grounds,
150 F.3d 1327 (11th Cir.
1998)
Environ. PD Insured sought a
defense to state
agency demand for
cleanup of
underground
petroleum
contamination at two
gasoline stations.
Exposure Exposure during policy
period to conditions that
result in property
damage constitutes an
occurrence.
S.C. Ins. Co. v. Coody,
813 F. Supp. 1570
(M.D. Ga. 1993)
Environ. PD Insured sought
coverage for cleanup
costs incurred in
complying with an
administrative order.
Injury-in-fact No coverage where both
the exposure to
pollutants and the
discovery of
contamination took place
prior to the inception of
the policy.
Hawaii Sentinel Ins. Co. v.
First Ins. Co. of Haw.,
Ltd., 875 P.2d 894
(Haw. 1994)
Construction
defect
Insured sought
coverage for claim
involving water
infiltration damage to
an apartment
complex.
Injury-in-fact
or continuous
The injury-in-fact trigger
is true to the terms of a
CGL policy, but where
damage occurs
continuously over a
period covered by
dierent insurers or
policies, a continuous
trigger may be employed.
Idaho N. Pac. Ins. Co. v. Mai,
939 P.2d 570 (Idaho
1997)
Environ. PD Insured sought
coverage for cleanup
costs arising from
disposal of wastes at
a Superfund site.
Injury-in-fact While court did not
definitively rule on issue
of trigger, concurring and
dissenting opinions
stated that injury-in-fact
trigger should apply to
define scope of insurer’s
coverage.
Illinois Travelers Ins. Co. v.
Eljer Mfg., Inc., 757
N.E. 2d 481 (Ill. 2001)
Property
damage
Insured sought
coverage for claims
involving defective
polybutylene pipes.
Injury-in-fact Physical injury to
tangible property did not
occur when the
plumbing system was
installed in homes that
did not experience leaks.
46 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Illinois Benoy Motor Sales,
Inc. v. Universal
Underwriters Ins. Co.,
679 N.E. 2d 414 (Ill.
App. Ct. 1997)
Environ. PD Insured sought
coverage for pollution
damage resulting
from the disposal of
waste oil at a landfill.
Continuous Damage resulting from
the discharge of
pollutants is a continuing
process and does not
stop and start in discrete
time periods.
Outboard Marine
Corp. v. Liberty Mut.
Ins. Co., 670 N.E. 2d
740 (Ill. App. Ct. 1996)
Environ. PD Insured sought
coverage for PCB
contamination of
Waukegan Harbor.
Continuous All policies in eect
during the time of
release of pollutants are
triggered.
U.S. Gypsum Co. v.
Admiral Ins. Co., 643
N.E. 2d 1226 (Ill. App.
Ct. 1994)
Asbestos PD Insured sought
coverage for asbestos
building claims.
Continuous All policies from the
exposure to, or
installation of, asbestos
to manifestation or
discovery of damage are
triggered.
Zurich Ins. Co. v.
Raymark Indus., Inc.,
514 N.E. 2d 150 (Ill.
1987)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Injury-in-fact Injury-in- fact occurred
during the period of
asbestos exposure and
the time of the diagnosis.
Indiana Grange Mut. Cas. Co.
v. W. Bend Mut. Ins.
Co., 946 N.E. 2d 593
(Ind. Ct. App. 2011)
Construction
defect
Insured sought
coverage for water
damage claims
resulting from the
insured’s fracture of a
storm drain pipe.
Injury-in-fact The time of the damage,
as opposed to the time of
the alleged negligent
conduct that caused the
damage, is the triggering
event.
Allstate Ins. Co. v.
Dana Corp., 759 N.E.
2d 1049 (Ind. 2001)
Environ. PD Insured sought
coverage for various
third-party and
government agency
suits for
environmental
contamination.
Injury-in-fact Coverage is triggered
where contamination
caused damage to
property during policy
period.
Kansas Atchison Topeka &
Santa Fe Ry. v.
Stonewall Ins. Co., 71
P.3d 1097 (Kan. 2003)
Hearing Loss BI Insured sought
coverage for
numerous noise
induced hearing
loss claims.
Continuous All policies are triggered
from first exposure to
manifestation of injury.
Cessna Aircraft Co. v.
Hartford Accident &
Indem. Co., 900 F.
Supp. 1489 (D. Kan.
1995)
Environ. PD Insured sought
coverage for
groundwater
contamination
resulting from
releases from its
manufacturing
facility.
Injury-in-fact Injury occurs when
damage actually takes
place, not at the time
of manifestation.
Kentucky Generali U.S. Branch v.
Nat’l Trust Ins. Co.,
2009 U.S. Dist. LEXIS
76890 (W.D. Ky. 2009)
Construction
defect
Insured sought
coverage for claims
asserted against it by
homeowners for
negligent
construction.
Continuous Under an occurrence-
based CGL policy, the
continuous trigger theory
applies to determine
coverage where the
damage can be
characterized as
continuous or
progressive.
Munich Re Construction Defect Resource Guide 47
Coverage trigger
State Citation Types of Case Facts Finding Comments
Louisiana Colville Plumbing &
Irrigation, Inc. v.
Century Ser. Co., 2013
U.S. Dist. LEXIS 1665
(W.D. La. 2013)
Construction
defect
Contractor sought
coverage for liabilities
arising from
underground
plumbing and sewer
work.
Manifestation Recognizing a split
between manifestation
and exposure authorities,
court held that damage
that results after
construction are
occurrences upon
manifestation.
Claredon Am. Ins. Co.
v. S. States Plumbing,
Inc., 803 F. Supp. 2d
544 (W.D. La. 2011)
Construction
defect
Insured sought
coverage for faulty
construction and
repair of plumbing
fixtures resulting in
mold exposure.
Manifestation Property damage occurs
when the damage
manifests itself, rather
than when the negligent
act which causes it
occurs.
Rando v. Top Notch
Props., L.L.C., 879 So.
2d 821 (La. Ct. App.
2004)
Construction
defect
Insured subcontractor
sought coverage for
claims for damages
caused by a faulty air
conditioning system.
Manifestation Defects in construction
that result in damage
subsequent to
completion are accidents
and occurrences when
they manifest
themselves.
Oxner v. Montgomery,
794 So. 2d 86 (La. Ct.
App. 2001)
Construction
defect
Homeowners sought
coverage from
builder’s insurers for
damages caused by
an unstable
foundation.
Manifestation A CGL policy is
triggered when the
damage manifests itself,
rather than when the
negligent act which
causes it occurs.
James Pest Control,
Inc. v. Scottsdale Ins.
Co., 765 So. 2d 485
(La. Ct. App. 2000)
Property
damage
Insured sought
coverage for termite
damage to a
condominium.
Manifestation The manifestation theory
is applicable and the
termite infestation did
not become damage
until the homeowners
discovered it.
Rubi v. Sunrise
Homes, 653 So. 2d
1215 (La.Ct. app. 1995)
Construction
defect
Insured developer
sought coverage for
damages caused by
foundation settlement
resulting from faulty
construction.
Manifestation The eects of the
excessive foundation
settlement did not
become damage until it
was discovered by
homeowners.
Maine Honeycomb Sys., Inc.
v. Admiral Ins. Co., 567
F. Supp. 1400 (D. Me.
1983)
Product Liability Insured manufactured
a dryer which had
problem welds in 1975
and cracks in 1977.
Manifestation Occurrence arises when
the injurious eects of
the occurrence become
apparent or manifest
themselves.
Maryland Maryland Cas. Co. v.
Hanson, 902 A.2d 152
(Md. Ct. Spec. App.
2006)
Lead BI Insured sought
coverage under
multiple policies for
lead poisoning
sustained by several
children in an
apartment.
Continuous Proof of continuous
exposure to lead, which
results in poisoning
injuries that continue for
several years, triggered
coverage under all
applicable policies.
48 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Maryland Nat‘l Union Fire Ins.
Co. of Pittsburgh, Pa. v.
Porter Hayden Co., 331
B.R. 652 (D. Md. 2005)
Asbestos BI Insured sought
coverage for bodily
injury claims resulting
from exposure to
asbestos-containing
materials.
Continuous Each policy in eect from
the date of exposure
through the date of
manifestation is
triggered.
Mayor & City Council
of Balt. v. Utica Mut.
Ins. Co., 802 A.2d
1070 (Md. Ct. Spec.
App. 2002)
Asbestos PD Insured sought
coverage for asbestos-
in-building claims.
Continuous A continuous trigger of
coverage is applicable for
long–term and
continuing damage
posed by the installation
and continued presence
of asbestos in buildings.
Chantel Assoc. v.
Mount Vernon Fire Ins.
Co., 656 A.2d 779 (Md.
1995)
Lead BI Insured sought
coverage for bodily
injuries resulting from
the ingestion of lead
paint chips.
Exposure Coverage is triggered
during any policy period
in which a claimant
ingested lead paint.
Nationwide Mut. Ins.
Co. v. Lafarge Corp.,
1994 WL 706538 (D.
Md. 1994)
Property
damage
Insured sought
coverage for claims
arising out of
defective cement
incorporated into
concrete railroad ties.
Injury-in-fact Complaint alleged
damage during the policy
period because the
deterioration of railroad
ties began immediately
upon installation.
Massachusetts A.W. Chesterton Co. v.
Mass. Ins. Insolvency
Fund, 838 N.E. 2d
1237 (Mass. 2005)
Asbestos BI Insured sought
coverage for bodily
injury claims resulting
from exposure to
asbestos-containing
materials.
Exposure Triggering event is the
exposure to, or inhalation
of asbestos, which
results in the injury, and
not the injury itself. The
continuing progression
of asbestos-related
disease, without some
additional exposure to
asbestos during the
policy period, will not
trigger coverage.
Rubenstein v. Royal
Ins. Co. of Am., 694
N.E. 2d 381 (Mass.
App. Ct. 1998), a’d,
708 N.E. 2d 639
(Mass. 1999)
Environ. PD Insured sought
coverage for pollution
resulting from leaking
underground storage
tanks.
Continuous Coverage is triggered
when the property was
being continuously
contaminated by oil.
Liberty Mut. Ins. Co. v.
Commercial Union Ins.
Co., 978 F.2d 750 (1st
Cir. 1992)
Asbestos BI Insured sought
coverage for
occupational disease
claims arising out of
asbestos.
Manifestation Coverage for
occupational disease
claims falls upon the last
insurer on the date of
disability, as determined
by the date of decreased
earning capacity.
Munich Re Construction Defect Resource Guide 49
Coverage trigger
State Citation Types of Case Facts Finding Comments
Michigan Continental Cas. Co. v.
Indian Head Ind., Inc.,
2012 U.S. Dist. LEXIS
51555 (E.D. Mich.
2013)
Asbestos BI Insured sought
coverage for asbestos
claims.
Injury-in-fact Injury-in-fact is proper
trigger, regardless of
allocation methodology.
Arco Indus. Corp. v.
Am. Motorists Ins. Co.,
594 N.W. 2d 61 (Mich.
Ct. App. 1998), a’d,
617 N.W. 2d 330
(Mich. 2000)
Environ. PD Insured sought
coverage for
groundwater
contamination arising
out of its operation of
a manufacturing
facility.
Injury-in-fact Each insurer is only
responsible for coverage
during its policy period.
Minnesota Donnelly Bros. Constr.
Co., Inc. v. State Auto
Prop. and Cas. Ins. Co.,
759 N.W. 2d 651
(Minn. Ct. App. 2009)
Construction
defect
Insured sought
coverage for claims
alleging that the
insured’s improper
application of stucco
resulted in water
intrusion damages.
Injury-in-fact To trigger a policy the
insured must show that
some damage occurred
during the policy period.
Tony Eiden Co. v.
Auto-Owners Ins. Co.,
2009 Minn. App.
Unpub. LEXIS 149
(Minn. Ct. App. 2009)
Construction
defect
Homeowners sued
insured contractor,
alleging numerous
construction defects
allowed water to enter
the home causing
on-going wood rot.
Injury-in-fact Although the injury to the
home was continuous,
the injuries were caused
by a period of discrete
incidents of water
intrusion, and only those
policies in eect at the
time of such incidents
are triggered.
W. Bend Mut. & SVK
Dev., Inc. v. Valley
Forge Ins. Co., 651 F.
Supp. 2d 983 (D.
Minn. 2009)
Construction
defect
Insured developer
sought coverage for
claims asserted by
homeowners, alleging
water damages
resulting from faulty
workmanship.
Injury-in-fact Only those policies in
eect when damage
occurred are triggered.
Wooddale Builders,
Inc. v. Maryland Cas.
Co., 722 N.W. 2d 283
(Minn. 2006)
Construction
defect
Insured sought
coverage for various
construction defect
claims filed against it.
Injury-in-fact The insurers on the risk
for a claim are those that
provided coverage
between the closing date
of the home and the date
the insured received
notice of the claim, and
such insurers are on the
risk for the entire period
of each triggered policy.
Parr v. Gonzalez, 669
N.W.2d 401 (Minn. Ct.
App. 2003)
Construction
defect
Homeowners sued
insured subcontractor
for mold damages
resulting, in part, from
the subcontractor’s
damage to a roof vent.
Injury-in-fact While damage from mold
in a house was
continuous, it could be
traced to a damaged vent
cap, and thus, there was
a discrete event that
triggered the policy in
eect at the time of the
damage.
50 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Mississippi Maxum Indem. Co. v.
Wilson, 707 F. Supp.
2d 683 (S.D. Miss.
2010)
Construction
defect
Building owner sued
insured building
subcontractor for
damages resulting
from the collapse of
its building.
Manifestation Property damage
occurred when building
collapsed, not at the time
it was constructed.
W. R. Grace Co. v. Md.
Cas. Co., No. 89-5138
(Miss. Cir. Ct. 1991)
Asbestos PD Insured sought
coverage for
settlement of
asbestos building
claims.
Continuous Damage to building from
asbestos products occurs
at the time such products
are in place and
continues as long as the
building contains the
products.
Missouri D.R. Sherry Constr.,
Ltd. v. Am. Family Mut.
Ins. Co., 316 S.W. 3d
899 (Mo. 2010)
Construction
defect
Insured builder
sought coverage for
structural damages to
home insured built.
Continuous An occurrence- based
policy covers cases of
progressive injury when
the cause of the damage
is present during the
policy period but not
apparent until after the
policy period.
Nebraska Nat’l. Fire & Marine
Ins. Co. v. Redland Ins.
Co., 2014 U.S. Dist.
LEXIS 107382 (D. Nev.
2014)
Construction
defect
Construction defect
claims in residential
development gave use
to insurer’s
subrogation claims.
Manifestation Noting that construction
defects do not
necessarily coincide with
timing of property
damage, court found as a
fact issue, when property
damage actually
occurred.
Dutton-Lainson Co. v.
Cont’l Ins. Co., 778
N.W. 2d 433 (Neb.
2010)
Environ. PD Insured sought
coverage for cleanup
costs arising from
disposal of waste
materials at landfills.
Continuous Deposit of wastes is one
continuing occurrence
which triggers all policies
in eect.
New
Hampshire
Energy North
Natural Gas, Inc. v.
Underwriters at
Lloyd’s, 848 A.2d 715
(N.H. 2004)
Environ. PD Insured sought
coverage of costs for
investigation and
cleanup of pollution at
manufactured gas
plants.
Injury-in-fact
and exposure
Court held dierent
trigger theories apply
due to variance of policy
language: injury-in-fact
applies where policy
requires that property
damage occur during
policy period, and
exposure trigger applies
where policy requires an
accident or occurrence
during policy period.
Munich Re Construction Defect Resource Guide 51
Coverage trigger
State Citation Types of Case Facts Finding Comments
New
Hampshire
Conductron Corp. v.
Am. Emp’rs Ins. Co.,
Nos. 93-E-149 and
93-C-599 (N.H. Super.
Ct., Mar. 4, 1997),
reprinted in 11
Mealey’s Ins. Litig.
Rep. No. 19 (Mar. 18,
1997)
Environ. PD Insured sought
coverage for
remediation costs
arising from its
discharge of
contaminated water.
Continuous Coverage is triggered
during policy period from
time of discharge and
migration through time
of remediation, and for
period when there is
additional damage to
property even though
discharge occurred prior
to the policy period.
N.H. Ball Bearings v.
Aetna Cas., 848 F.
Supp. 1082 (D. N.H.
1994), rev’d in part on
other grounds, 43 F.3d
749 (1st Cir. 1995)
Environ. PD Insured sought
coverage for cleanup
costs arising from
discharge of
hazardous wastes into
groundwater.
Manifestation Coverage is triggered
when contamination of
groundwater is
reasonably capable of
being discovered.
New Jersey Cypress Point Condo.
Ass’n. v. Selective Way
Ins. Co., 2015 N.J.
Super. Unpub. LEXIS
721 (Law Div. 2015)
Construction
defect
Homeowners
Association sued
insurers of defaulted
contractor for various
water damage.
Continuous Recognizing that
continuous trigger
applies to third-party
claims and manifestation
for first-party claims,
court applied continuous
trigger.
Selective Way Ins. Co.
v. Arthur J. Ogren, Inc.,
2010 N.J. Super.
Unpub. LEXIS 2979
(N.J. App. Div. 2010)
Construction
defect
County sued insured
contractor, alleging
water damages
resulting from faulty
construction work.
Manifestation
/continuous
It is not necessary to
determine whether the
continuous-trigger
applies because the
damage was manifest
before policy inception.
Quincy Mut. Fire Ins. v.
Borough of Bellmawr,
799 A.2d 499 (N.J.
2002)
Environ. PD Insured sought
coverage for pollution
resulting from the
disposal of hazardous
waste into a landfill.
Continuous Exposure relating to the
initial depositing of toxic
waste into a landfill is the
first trigger of coverage.
Carter-Wallace, Inc. v.
Admiral Ins. Co., 712
A.2d 1116 (N.J. 1998)
Environ. PD Insured sought
coverage for pollution
arising out of its
disposal of waste at a
landfill.
Continuous Damages should be
allocated among years
based upon the amount
of risk assumed by the
insured and insurers in
each year and allocated
vertically among policies
in each year based upon
full policy limits.
New York Travelers Ins. Co. v.
Eljer Mfg., Inc., 757
N.E. 2d 481 (Ill. 2001)
Property
damage
Insured sought
coverage for claims
involving defective
polybutylene pipes.
Injury-in-fact If installation of
potentially defective
plumbing system caused
a diminution of value of
home greater than the
value of the plumbing
system itself, injury to
tangible property
occurred (applying New
York law).
52 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
New York Stonewall Ins. Co. v.
Asbestos Claims
Mgmt. Corp., 73 F.3d
1178 (2d Cir. 1995),
modified, 85 F.3d 49
(1996)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Continuous Coverage is triggered
under all policies in
eect from the date of
first exposure to
manifestation.
Maryland Cas. Co. v.
W.R. Grace & Co., 23
F.3d 617 (2d Cir. 1993)
Asbestos PD Insured sought
coverage for asbestos
in building claims.
Injury-in-fact Property damage occurs
upon the installing of
asbestos products and
continues until it is
discovered.
North
Carolina
Harleysville Mut. Ins.
Co. v. Hartford Cas.
Ins. Co., 2015 U.S.
Dist. LEXIS 25362
(E.D.N.C. 2015)
Construction
defect
Contractor’s claims
for coverage for
defective roofing
liabilities.
Injury-in-fact Rejecting date work was
completed, and because
precise dates of damage
were not ascertainable,
court adopted a “multiple
approach” injury-in-fact
trigger.
Erie Ins. Exch. v.
Builders Mut. Ins. Co.,
742 S.E. 2d 803 (N.C.
Ct. App. 2013)
Construction
defect
Newly graded slope
and retaining wall
collapsed causing
extensive damage to
home.
Injury-in-fact Where the timing of the
injury-in-fact can be
ascertained with
certainty, the policy then
in eect is triggered.
Harleysville Mut. Ins.
Co. v. Berkley Ins. Co.
of the Carolinas, 610
S.E. 2d 215 (N.C. Ct.
App. 2005)
Construction
defect
Homeowners sued
insured builder,
alleging elevated
moisture levels
resulting from
negligently installed
synthetic stucco.
Injury-in-fact The alleged damage
occurred on the dates
repairs were performed,
not on the date of
discovery.
Builders Mut. Ins. Co.
v. Mitchell, 709 S.E. 2d
528 (N.C. Ct. App.
2011)
Construction
defect
Homeowners sued
insured contractor,
alleging the insured’s
faulty workmanship
caused water damage.
Injury-in-fact Whether the date of the
injury-in-fact can be
known with certainty is a
genuine issue of material
fact and should not be
resolved on summary
judgment.
Alliance Mut. Ins. Co.
v. Guilford Ins. Co.,
2011 N.C. App. LEXIS
473 (N.C. Ct. App.
2011)
Construction
defect
Insured plumbing
contractor sought
coverage for water
damage caused by the
separation of a water
supply line.
Injury-in-fact Because the water
damage did not result
from a continual leak, the
damage took place when
the leak occurred as
opposed to the date of
improper installation.
Munich Re Construction Defect Resource Guide 53
Coverage trigger
State Citation Types of Case Facts Finding Comments
North
Carolina
Hutchinson v. Nat’l
Mut. Fire Ins. Co., 594
S.E.2d 61 (N.C. Ct.
App. 2004)
Construction
defect
Homeowners sued
insured builder,
alleging damages
resulting from the
continual entry of
water into a
negligently
constructed retaining
wall.
Injury-in-fact Even in situations where
damage continues over
time, if it can be
determined when the
defect occurred from
which all damages flow,
coverage is triggered on
the date of the defect:
here, the date the
retaining wall was
constructed.
North
Dakota
Grinnell Mut.
Reinsurance Co. v.
Thies, 755 N.W. 2d
852 (N.D. 2008)
Environ. PD Insureds sought
coverage for a third-
party property
damage claim
involving mold
accumulation.
Injury-in-fact Court held language of
policy required proof that
damage occurred “during
policy period” before
policy was triggered.
Kief Farmers Co-Op
Elevator Co. v.
Farmland Mut. Ins.
Co., 534 N.W. 2d 28
(N.D. 1995)
Property
damage
Insured sought
coverage for claim
based on progressive
damage to grain
storage bin.
Injury-in-fact Appropriate trigger of
coverage for progressive
property damage was
whether actual, but
undiscovered loss or
damage could be proved
in retrospect to have
commenced during
policy period.
Ohio Ohio Cas. Ins. Co. v.
Hanna, 2008 Ohio
3203 (Ohio Ct. App.
2008)
Construction
defect
Homeowners sued
insured construction
company, alleging
faulty framing created
several problems with
the home.
Continuous If an occurrence is
continuous, it may
trigger multiple policies.
Plum v. W. Am. Ins.
Co., 2006 Ohio 452
(Ohio Ct. App. 2006)
Construction
defect
Homeowners sued
insured builder,
alleging damages
resulting from
improper settling.
Continuous Where a structure suers
damage of a continuing
nature, coverage must be
apportioned among the
insurance carriers that
insured the property
during the course of the
damage.
Westfield Ins. Co. v.
Milwaukee Ins. Co.,
2005 Ohio 4746 (Ohio
Ct. App. 2005)
Construction
defect
Homeowner sued
insured builder,
alleging faulty
construction caused
water damage.
Continuous Where a structure suers
damage of a continuing
nature, coverage must be
apportioned among
insurance carriers that
insured the property
during the course of the
damage.
54 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Ohio Reynolds v. Celina
Mut. Ins. Co., 2000
Ohio App. LEXIS 517
(Ohio Ct. App. 2000)
Construction
defect
Homeowners sued
insured contractor,
alleging defects in
the construction of
their home.
Manifestation The date for determining
whether property
damage falls within the
coverage period is when
the first discoverable
manifestations of
damage occur.
Sandborn Plastics
Corp. v. St. Paul Fire &
Marine Ins. Co., 616
N.E. 2d 988 (Ohio Ct.
App. 1993)
Environ. PD Insured sought
coverage for cleanup
costs at a waste oil
facility.
Injury-in-fact Coverage is triggered at
the time waste causes
property damage or
injury at site, not when
insured handles or
transfers waste for
disposal.
Oregon Cal. Ins. Co. v. Stimson
Lumber Co., 2004 U.S.
Dist. LEXIS 10098 (D.
Or. 2004), a‘d in part,
325 Fed. Appx. 496
(9th Cir. 2009)
Property
damage
Insured manufacturer
sought coverage for
warranty and repair
claims related to its
defective siding
product.
Injury-in-fact Coverage exists under
every policy that was in
eect during the time
periods in which damage
to property actually
occurred, even if the
damage was discovered
long after it began.
St. Paul Fire & Marine
Ins. Co. v. McCormick
& Baxter Creosoting
Co., 923 P.2d 1200 (Or.
1996)
Environ. PD Insured sought
coverage for pollution
arising out of its
operation of several
wood treatment
plants.
Injury-in-fact If property is injured
during the policy period,
coverage is triggered
regardless of when the
damage is discovered or
when the insured’s
liability becomes fixed.
Pennsylvania Wausau Underwriters
Inc. Co. v. Emp’rs Ins.
Co., 557 F. Supp. 2d
502 (D.N.J. 2008)
(applying Pa. law)
Construction
defect
Condominium
association sued
insured stone
manufacturer/
distributor as a result
of deteriorating stone
fascia applied to the
outside of the
condominiums.
Manifestation An occurrence happens
when the injurious
eects of the negligent
act first manifest in a
way that would put a
reasonable person on
notice of damage.
West Am. Ins. Co. v.
Endel Lindepuu, 128 F.
Supp. 2d 220 (E.D. Pa.
2000)
Construction
defect
A group of
homeowners sued
insured subcontractor,
alleging damages
resulting from the
defective installation
of doors and windows.
Manifestation Because the
subcontractor was
insured at the time of
installation and when the
problems were
discovered, the multiple
trigger used in
asbestosis cases is not
justified here.
Munich Re Construction Defect Resource Guide 55
Coverage trigger
State Citation Types of Case Facts Finding Comments
Pennsylvania Rohm & Haas Co. v.
Cont’l Cas. Co., 35
Phila. 193 (Pa. C.P.
1997)
Environ. PD Insured sought
coverage for cleanup
and defense costs
incurred as a result
of environmental
contamination at
two sites.
Continuous Continuous trigger
theory is appropriate
because environmental
property damage is a
progressive, indivisible
harm.
Rhode Island Textron, Inc. v. Aetna
Cas. and Sur. Co., 754
A.2d 742 (R.I. 2000)
Environ. PD Insured sought
coverage for pollution
arising out of its
manufacture of
aerospace equipment.
Manifestation Property damage
triggers coverage under
a CGL policy when the
damage (1) manifests
itself, (2) is discovered, or,
(3) in the exercise of
reasonable diligence is
discoverable.
CPC Int’l, Inc. v.
Northbrook Excess &
Surplus Ins. Co., 668
A.2d 647 (R.I. 1995)
Environ. PD Insured sought
coverage for pollution
arising out of its
operation of a
manufacturing
facility.
Manifestation Coverage is triggered by
an occurrence taking
place when property
damage is discoverable.
South
Carolina
Crossman Cmtys of
N.C. v. Harleysville
Mut. Ins. Co., 717 S.E.
2d 589 (S.C. 2011)
Construction
defect
Homeowners sued
insured developers,
alleging that the
exterior components
of their homes were
negligently
constructed, causing
water damage.
Modified
continuous
Coverage is triggered
for the time of an injury-
in-fact and continuously
thereafter to allow
coverage under all
policies in eect from
the time of an injury-in-
fact during the
progressive damage.
Liberty Mut. Fire Ins.
Co. v. J. T. Walker
Indus., 817 F. Supp. 2d
784 (D.S.C. 2011)
Construction
defect
Insured window
manufacturer sought
coverage for five suits
filed by homeowners
for progressive
damage.
Injury-in-fact Every insurance policy
in eect during the
period of progressive
damage is triggered.
Stonehenge Eng’g
Corp. v. Employers Ins.
of Wausau, 201 F.3d
296 (4th Cir. 2000)
Construction
defect
Insured sought
coverage for
construction defect
claims involving
defective buildings.
Modified
continuous
Coverage is triggered by
all policies in eect from
the time the complainant
was actually damaged
and continuously
thereafter until the end of
the progressive damage,
even if damage
continues after discovery.
Joe Harden Builders,
Inc. v. Aetna Cas. &
Sur. Co., 486 S.E. 2d
89 (S.C 1997)
Construction
defect
Insured sought
coverage for
progressive property
damage caused
by defective
construction.
Modified
continuous
Coverage is triggered at
the time of an injury-in-
fact and continuously
thereafter.
56 Munich Re Construction Defect Resource Guide
Coverage trigger
State Citation Types of Case Facts Finding Comments
Texas Md. Cas. Co. v.
Acceptance Indem.
Ins. Co., 639 F.3d 701
(5th Cir. 2011)
Construction
defect
Homeowner sued
insured pool
contractor alleging
faulty work resulted
in damage to his pool.
Injury-in-fact Determining when
property damage occurs
requires focus on the
time of the actual
physical damage to the
property, not the time of
negligent conduct that
later results in damage.
VRV Dev. L.P. v.
Mid-Continent Cas.
Co., 630 F.3d 451 (5th
Cir. 2011)
Construction
defect
Homeowners sued
insured developer,
alleging faulty
construction resulted
in the collapse of
retaining walls.
Injury-in-fact Property damage does
not necessarily occur at
the first link in the causal
chain of events giving
rise to the property
damage. The damage
occurred at the time of
collapse, not when the
retaining walls were
negligently constructed.
Pine Oak Builders, Inc.
v. Great Am. Lloyds
Ins. Co., 279 S.W. 3d
650 (Tex. 2009)
Construction
defect
Homeowners sued
insured builder,
alleging defective
construction caused
water damage to their
homes.
Injury-in-fact Under the actual-injury
rule, property damage
occurred when the home
suered wood rot or
other physical damages.
Utah Quaker State Minit-
Lube, Inc. v. Fireman’s
Fund Ins. Co., 868 F.
Supp. 1278 (D. Utah
1994), a’d, 52 F.3d
1522 (10th Cir. 1995)
Environ. PD Insured sought
coverage for pollution
arising out of its
disposal of waste oil
at a waste oil
recycling facility.
Injury-in-fact Coverage is triggered
each time hazardous
waste such as waste oil
was discharged onto the
property.
Vermont Towns v. N. Sec. Ins.
Co., 964 A.2d 1150 (Vt.
2008)
Environ. PD Insured sought
coverage for defense
and remediation costs
incurred as a result of
depositing waste and
debris at a site.
Continuous Where hazardous
chemicals progressively
migrate into the
groundwater and soil on
the insured’s property,
each of the insurers are
liable for the resulting
environmental damage,
which begins from point
of initial exposure or
contamination.
State of Vt. v. CNA Ins.
Cos., 779 A.2d 662
(Vt. 2001)
Environ. PD Insured sought
coverage for
environmental
cleanup damage
sought from it in an
administrative
proceeding.
Injury-in-fact Continuous trigger does
not apply where there is
no evidence of damage
from the date of
discharge of pollutants in
the 1950s until the
discovery in the 1990s.
Virginia Morrow Corp. v.
Harleysville Mut. Ins.
Co., 101 F. Supp. 2d
422 (E.D. Va. 2000)
Environ. PD Insured sought
coverage for cleanup
costs.
Injury-in-fact Coverage is triggered
when continuous or
progressive injury occurs
during policy period.
Munich Re Construction Defect Resource Guide 57
Coverage trigger
State Citation Types of Case Facts Finding Comments
Virginia C.E. Thurston & Sons,
Inc. v. Chi. Ins. Co., No.
2:97 CV 1034 (E.D.
Va., Oct. 2, 1998),
reprinted in 12
Mealey’s Ins. Litig.
Rep. No. 47 (Oct. 20,
1998)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Continuous Continuous trigger
theory applies and is
consistent with “all
sums” approach.
Washington Am. States Ins. Co. v.
Century Sur. Co., 2011
Wash. App. LEXIS
2488 (Wash. Ct. App.
2011)
Construction
defect
Apartment owner
sued insured siding
contractor, alleging
defective siding
installation resulted in
progressive moisture
damages.
Continuous Every policy spanning
the period during which
property damage
progresses is liable for all
damages attributable to
the occurrence.
Cadet Mfg. Co. v. Am.
Ins. Co., 2006 U.S.
Dist. LEXIS 51241
(W.D. Wash. 2006)
Environ. PD Insured sought
coverage for
environmental
liabilities arising out
of its manufacturing
operations at two
sites.
Continuous The migration of
pollutants into the
subsoil and groundwater
constitutes “continuous
and repeated” exposure
and property damage,
and a continuous trigger
of coverage applies.
Villella v. Pub. Emp.
Mut. Ins. Co., 725 P.2d
957 (Wash. 1986)
Construction
defect
Coverage sought
under homeowner’s
policy for damages
resulting from a
foundation shift
caused by negligent
construction.
Injury-in-fact For a policy to be
triggered, damage must
occur during the policy
period, and here, the
residence was not
damaged until the
foundation shifted.
Gruol Constr. Co. v.
Ins. Co. of N.A., 524
P.2d 427 (Wash. Ct.
App. 1974)
Construction
defect
Insured piled dirt
against box sills of
apartment building by
backfilling during
construction,
resulting in
progressively
worsening dry rot.
Continuous Where damage was a
continuous process set in
motion at the time of
construction, all policies
in eect during the total
period of the
undiscovered condition
are triggered.
West Virginia Simpson-Littman
Constr., Inc. v. Erie Ins.
Prop. Cas. Ins. Co.,
2010 U.S. Dist. LEXIS
95378 (S.D. W. Va.
2010)
Construction
defect
Homeowner sued
insured contractor,
alleging that faulty
construction and the
failure to supervise
masonry contractor
resulted in the
improper settling
of his home.
Manifestation The date on which the
property damage is
deemed to have occurred
is the date of the actual
injury (i.e., the date the
cracks in the walls or
foundation appeared).
58 Munich Re Construction Defect Resource Guide
Munich Re Construction Defect Resource Guide 59
Allocation of loss
After determining the applicable trigger of coverage, damages may be allocated over
multiple triggered years and policies.
Courts have applied two primary methods for determining how policies will respond to a loss:
Pro Rata
Cases that conclude that policies in a particular policy period respond in proportion to
the amount of injury or damage that takes place during that policy period are known as
“pro rata” cases. This approach relies on the policy language that limits coverage to those
injuries or damages that take place “during the policy period.” Decisions that require
proration sometimes require that the policyholder share in the allocation by requiring it
to bear the loss for periods of self-insurance or no insurance.
All Sums
Cases that conclude that policies in a particular policy period respond in full, subject to
their limits, are known as “all sums” cases. These decisions generally hold that, based on
the all sums language contained in the policies, a policyholder should be permitted to
“pick and choose” the insurance policy or policies that are required to pay the covered loss.
Under this approach the policyholder may select a policy year and proceed vertically
through each successive layer of insurance to pay the loss. In such jurisdictions, courts
will also frequently recognize contribution rights of insurers whose policies were selected.
The following is a summary of selected cases addressing allocation of loss. Because the
allocation of a construction defect claim can be very similar to that of other long-tail claims,
such as environmental or asbestos, where there have not been cases identified in a specific
state that deal directly with the allocation of a construction defect claim, reference is made
to cases involving other types of continuous losses.
60 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Alabama Commercial Union Ins.
Co. v. Sepco Corp., 918
F.2d 920 (11th Cir. 1990)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Pro rata Defense costs allocated
pro rata by months
during period of
exposure; insured shares
in defense costs for
years in which it lacked
coverage.
Arkansas Murphy Oil USA, Inc. v.
U.S. Fid. & Guar. Co., No.
91-439-2 (Ark. Cir. Ct.
Feb. 21, 1995), reprinted
in 9 Mealey’s Ins. Litig.
Rep. No. 19, Section I
(Mar. 21, 1995)
Environ. PD Insured sought
coverage for three
petroleum spills
which took place on
property it rented.
All sums Insurers are jointly and
severally liable up to the
policy limits. The
insurers’ cross-claims
will resolve any
allocation disputes
among the insurers in
the event coverage is
ultimately found for
the claim.
California Cont. Ins. Co. v. Emp‘rs
Ins. of Wausau, 145 Cal.
Rptr. 3d 1(Cal. 2012)
Environ. PD State of California
sought indemnity
from several insurers
in connection with the
cleanup of a waste
site.
All sums The “during the policy
period” language does
not appear in the
“Insuring Agreement”
section of the policy and
therefore, does not
modify the “all sums”
language in the insuring
agreement.
Travelers Cas. & Sur. Co.
v. Century Sur. Co., 13
Cal. Rptr. 3d 526 (Cal.
Ct. App. 2004)
Construction
defect
One insurer sought
contribution from
another for defense
and indemnity paid
for a construction
defect claim spanning
multiple policy
periods.
Pro rata Each insurer is liable for
a pro rata share of
defense and indemnity
based on its time-on-
the-risk.
Centennial Ins. Co. v.
U.S. Fire Ins. Co., 105
Cal. Rptr. 2d 559 (Cal.
Ct. App. 2001)
Construction
defect
Insured sought
coverage for property
damage resulting
from construction
defects.
Pro rata The time-on-the-risk
method of allocating
defense costs among
multiple insurance
carriers is the equitable
way to apportion such
costs.
Fireman’s Fund Ins. Co.
v. Md. Cas. Co., 77 Cal.
Rptr. 2d 296 (Cal. Ct.
App. 1998)
Construction
defect
One insurer sought
contribution from
another for cost of
defending and settling
construction defect
claims.
Pro rata Each insurer was liable
for pro rata share of
defense and indemnity
based on its time-on-
the-risk.
Munich Re Construction Defect Resource Guide 61
Allocation of loss
State Citation Types of Case Facts Finding Comments
California Montrose Chem. Corp. v.
Admiral Ins. Co., 913
P.2d 878 (Cal. 1995)
Environ. BI & PD Insured sought a
defense to lawsuits
involving pollution
from the disposal of
waste at landfills.
All sums Continuous trigger
applies, but an insurer
may allocate the loss
among additional
insurers based on the
“other insurance”
provisions.
Colorado D.R. Horton, Inc. v.
Mountain States Mut.
Cas. Co., 2014 U.S. Dist.
LEXIS 132563 (D. Colo.
2014)
Construction
defect
Allocation of defense
costs among six
insurers in
construction defect
litigation.
All sums The relative liability of
subcontractors,
respective limits of
triggered policies, and
each insurer’s time–on–
the–risk are factors
relevant to the ultimate
allocation of the defense
costs among insurers.
Travelers Indemn. Co.
of America v. AAA
Waterproofing, Inc., 2014
U.S. Dist. LEXIS 6334
(D. Colo. 2014)
Construction
defect
Allocation of defense
costs in construction
defect litigation.
All sums Each subcontractor/
insurer has a joint and
several duty to provide a
complete defense, and
no reliable method
exists to tie allocation to
liability or policy limits.
Public Serv. Co. of Colo.
v. Wallis & Cos., 986 P.2d
924 (Colo. 1999)
Environ. PD Insured sought
coverage for costs
incurred in the
cleanup of two
landfills.
Pro rata Liability is allocated
proportionately among
insurance policies
according to both time–
on–the–risk and to the
degree of risk assumed.
Connecticut Travelers Cas. & Sur. Co.
v. The Netherlands Ins.
Co., 95 A.3d 1031 (Conn.
2014)
Construction
defect
Allocation of losses in
a construction defect
claim involving
continuous and
progressive damages.
Pro rata Continuous trigger
and a pro rata method
of allocating losses
apply in construction
defect claims.
Sec. Ins. Co. Of Hartford
v. Lumbermens Mut.
Cas. Co., 826 A.2d 107
(Conn. 2003)
Asbestos BI Insured sought
coverage for defense
costs for asbestos
bodily injury claims.
Pro rata Defense costs should
be pro-rated based on
time–on–the–risk, and
the insured should pay
its fair share for
uninsured periods.
Delaware Hercules Inc. v. AIU Ins.
Co., 784 A.2d 481 (Del.
2001)
Environ. PD Insured sought
coverage for pollution
arising from its
chemical
manufacturing
facility.
All sums The insurers are jointly
and severally liable for
sums they are legally
obligated to pay. The
court did not preclude
subsequent reallocation
among insurers.
District of
Columbia
Keene Corp. v. Ins. Co.
Of N. Am., 667 F.2d 1034
(D.C. Cir. 1981)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums Each triggered policy is
jointly and severally
liable. The triggered
insurer may seek
contribution from other
triggered policies.
62 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Georgia Nat‘l Serv. Indus., Inc. v.
St. Paul Guardian Ins.
Co., No. 2004 CV 83960
(Ga. Super. 2005),
reprinted in 19 Mealey’s
Ins. Litig. Rep. No. 30,
Section E (June 14,
2005)
Asbestos BI Insured sought
coverage for
numerous asbestos
bodily injury claims.
Pro rata Pro rata time-on-the-risk
method determines
coverage since an
insurer should not
provide coverage during
periods where bodily
injury did not occur.
Liberty Mut. Ins. Co. v.
Wheelwright Trucking
Co., 851 So. 2d 466 (Ala.
2002)
Property
damage
Insured sought
coverage for damages
arising out of its
manufacture of
defective trailers.
Pro rata A separate SIR must
be paid in full by the
insured for each policy
that is triggered.
Hawaii Natilus Ins. Co. v.
Lexington Ins. Co., 321
P.3d 634 (Haw. 2014)
Construction
defect
Supreme Court of
Hawaii addressed
certified questions
from the 9th Circuit
Court of Appeals.
Hybrid Insurers may not avoid
a duty to defend based
on other insurer’s
obligations or other
insurance clauses.
Equitable contribution
among insurers
permitted.
Sentinel Ins. Co. v. First
Ins. Co. of Haw., Ltd. 875
P.2d 894 (Haw. 1994)
Construction
defect
Insured sought
coverage for claim
involving water
infiltration damage to
an apartment
complex.
Pro rata Where injury-in-fact
occurs continuously
over period covered
by dierent insurers
or policies, continuous
trigger may allocate
contribution among
liable insurers in
proportion to time–
on–the–risk.
Illinois Ill. Cent. R.R. v. Accident
& Cas. Co. of Winterthur,
739 N.E. 2d 1049 (Ill.
App. Ct. 2000)
Employment
discrimination
Insured sought
coverage for the costs
of settlement of a
class action involving
discriminatory hiring
practices.
Pro rata Where the insured is
unable to allocate
damages based upon
the time the injury
was suered, damages
were allocated on a pro
rata basis over all
triggered years.
Mo. Pac. R.R. v. Int‘l Ins.
Co., 679 N.E. 2d 801 (Ill.
App. Ct. 1997)
Hearing loss
& asbestos BI
Insured sought
coverage for
numerous noise
induced hearing loss
and asbestos bodily
injury claims.
Pro rata Although multiple
policies may be
triggered, the insurer
is obligated to pay only
an amount attributable
to the injury which
occurs during its policy
period based on the
evidence or based on a
pro rata time–on–the–
risk allocation.
Munich Re Construction Defect Resource Guide 63
Allocation of loss
State Citation Types of Case Facts Finding Comments
Illinois Outboard Marine Corp.
v. Liberty Mut. Ins. Co.,
670 N.E. 2d 740 (Ill. App.
Ct. 1996)
Environ. PD Insured sought
coverage for
environmental
cleanup.
Pro rata Court adopted pro
rata allocation by
time-on-the- risk
analysis with horizontal
exhaustion of primary
policies. If no insurance
is available for a time
period, the insured is
responsible for its
pro rata share.
Zurich Ins. Co. v.
Raymark Indus., Inc., 514
N.E. 2d 150 (Ill. 1987)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums Court rejected pro
rata allocation, letting
stand the appellate
ruling of joint and
several liability between
insurers. Subsequent
reallocation among
insurers is allowed.
Indiana Thomson Inc. v. Ins. Co.
of N. Am., 11 N.E. 3d 982
(Ind. Ct. App. 2014)
Workplace BI Insurance company’s
duty to defend and
application of
employer’s liability
exclusion.
Pro rata Pro rata allocation
method was proper and
the trial court on remand
should determine the
injuries and timing of
each injury during each
contract period and
allocate the loss
accordingly.
Allstate Ins. Co. v. Dana
Corp., 759 N.E. 2d 1049
(Ind. 2001)
Environ. PD Insured sought
coverage for the costs
of cleaning up
pollution at various
sites.
All sums Insurer indemnifies
insured for all sums
insured must pay as a
result of an occurrence
but subsequent
reallocation among
insurers is allowed.
Iowa Mid-Am. Energy Co. v.
Certain Underwriters at
Lloyd’s London, No.
107142 (Iowa Dist. Ct.
2011), reprinted in 25
Mealey’s Ins. Litig. Rep.
No. 11 (Jan. 19, 2011)
Environ. PD Insured sought
coverage for
investigation and
remediation costs
associated with
property damage.
Pro rata Losses allocated
proportionately
among insurers on risk.
Insured will share in
allocation for periods
when it was not insured
or was self-insured.
Kansas Liberty Mut. Fire Ins. Co.
v. Harper Indus., Inc.,
2007 U.S. Dist. LEXIS
10753 (W.D. Ky. 2007)
Products
liability
Insurer sought
allocation of costs
incurred in defending
insured concrete
supplier against
product defect claims.
Pro rata Each insurer responsible
for their individual and
proportionate share of
defense costs of insured.
64 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Kansas Atchison Topeka &
Santa Fe Ry. v. Stonewall
Ins. Co., 71 P.3d 1097
(Kan. 2003)
Hearing loss BI Insured sought
coverage for
numerous noise
induced hearing loss
claims.
Pro rata Excess insurers not
jointly and severally
liable because allocation
based on joint and
several liability is not
consistent with the term
“all sums” and
contradicts the
agreement to indemnify
the insured for injuries
during a specific policy
period.
Kentucky Generali U.S. Branch v.
Nat’l Trust Ins. Co., 2009
U.S. Dist. LEXIS 76890
(W.D. Ky. 2009)
Construction
defect
Contractor sought
coverage for negligent
construction claims
asserted by
homeowners.
No allocation So long as a reasonable
fact-finder can
determine what damage
to contactor’s work
occurred during various
policy periods, court
cannot make an
equitable allocation.
Liberty Mut. Fire Ins. Co.
v. Harper Indus., Inc.,
2007 U.S. Dist. LEXIS
10753 (W.D. Ky. 2007)
Products
liability
Insurer sought
allocation of costs
incurred in defending
insured concrete
supplier against
product defect claims.
Pro rata Each insurer is
responsible for its
individual and
proportionate share of
defense costs of insured.
Aetna Cas. & Sur. Co. v.
Commonwealth of Ky.,
179 S.W. 3d 830 (Ky.
2005)
Environ. PD Insured sought
coverage for costs
incurred in
participating in a
CERCLA cleanup of a
contaminated landfill.
Pro rata Court held that the
damages should be
allocated over all
triggered periods based
on policy limits.
Louisiana Cole v. Celotex Corp.,
599 So. 2d 1058 (La.
1992)
Asbestos BI Executive oicers and
directors of insured
sought coverage for
asbestos claims filed
against them.
Pro rata Court held that each
asbestos claimant’s
judgment should be
spread over all triggered
policies during the
period of exposure.
Ducre v. Mine Safety
Appliances, Co., 645 F.
Supp. 708 (E.D. La.
1986), a'd, 833 F.2d
588 (5th Cir. 1987)
Silica BI Insured sought
coverage for injuries
to workers arising out
of their exposure to
silica and other dust.
Pro rata Indemnity payments
should be divided by the
total number of years of
exposure to determine
amount allocated to
each year.
Maryland Riley v. United Servs.
Auto. Assoc., 871 A.2d
599 (Md. Ct. Spec. App.
2005), a’d, 899 A.2d
819 (Md. 2006)
Lead BI Insured sought
coverage for bodily
injury claims alleging
exposure to lead paint
over multiple policy
periods.
Pro rata When the parties cannot
attribute the damages
among dierent periods,
the damages are
allocated pro rata
among all policies based
on time–on–the–risk.
Munich Re Construction Defect Resource Guide 65
Allocation of loss
State Citation Types of Case Facts Finding Comments
Maryland In re Wallace & Gale Co.,
385 F.3d 820 (4th Cir.
2004)
Asbestos BI Insured sought
coverage for
numerous asbestos
bodily injury claims.
Pro rata Pro rata allocation is
appropriate because
it is not equitable for an
insurance company to
pay for uninsured
periods.
Mayor & City Council of
Balt. v. Utica Mut. Ins.
Co., 802 A.2d 1070 (Md.
Ct. Spec. App. 2002)
Asbestos PD Insured sought
coverage for asbestos-
in-building claims.
Pro rata A continuous trigger of
coverage is applicable
for long-term and
continuing damage
posed by the installation
and continued presence
of asbestos in buildings.
Massachusetts Narragansett Electric
Co. v. Am. Home
Assurance Co., 999 F.
Supp. 2d 511 (S.D.N.Y.
2014) (applying
Massachusetts law)
Environ. PD CERCLA
environmental
remediation litigation
with resulting
coverage litigation.
All sums The Court predicted that
Massachusetts would
allocate defense costs
jointly and severally
when the insurer has
breached the duty to
defend.
New England Insulation
Co., Inc. v. Liberty Mut.
Ins. Co., 988 N.E. 2d 450
(Mass. App. Ct. 2013)
Asbestos BI Liability of insurers in
asbestos bodily injury
cases.
Pro rata Applied holding in
Boston Gas to asbestos
BI claims.
Boston Gas Co. v.
Century Indemn. Co.,
910 N.E. 2d 290 (Mass.
2009)
Environ. PD Insured sought
coverage for pollution
damage at former
manufactured gas
plant sites.
Pro rata When contamination
takes place over several
years, indemnity
obligations of insurers
should be pro-rated
based on time–on–risk,
and the insured is
responsible for periods
without insurance.
Rubenstein v. Royal Ins.
Co. of Am., 694 N.E.2d
381 (Mass. App. Ct.
1998), a’d. 708 N.E.2d
639 (Mass. 1999)
Environ. PD Insured sought
coverage for pollution
resulting from leaking
underground storage
tanks.
All sums Each triggered policy is
jointly and severally
liable for the entire
claim, but an insurer can
obtain a share of
indemnification or
defense costs from other
insurers.
Michigan Cont. Cas. Co. v. Indian
Head Indus. Inc., 2010
U.S. Dist. LEXIS
3170(E.D. Mich. 2010)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Pro rata Pro rata time–on–risk
method fairly allocates
risk that insured entered
into when it issued
policy to insured.
Wolverine World Wide,
Inc. v. Liberty Mut. Ins.
Co., 2007 WL 705981
(Mich. Ct. App. 2007)
Environ. PD Insured sought
coverage for pollution
caused by its disposal
of tannery waste at a
landfill.
Pro rata Damages should be
allocated on a pro rata
time-on-the-risk basis
over all policies for
duration of pollution.
66 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Michigan Stryker Corp. v. Nat‘l
Union Fire Ins. Co. of
Pittsburgh, Pa., 2005 WL
1610663 (W.D. Mich.
2005)
Bodily injury Insured sought
coverage for bodily
injury claims arising
out of defective knee
implants.
Pro rata Pro rata allocation is
consistent with the
policy language in this
case and with the injury-
in-fact trigger of
coverage adopted by the
Michigan Supreme
Court.
Arco Indus. Corp. v. Am.
Motorists Ins. Co., 594
N.W. 2d 61 (Mich. Ct.
App. 1998), a’d, 617
N.W. 2d 330 (Mich.
2000)
Environ. PD Insured sought
coverage for
groundwater
contamination arising
out of its operation of
a manufacturing
facility.
Pro rata Each insurer is only
responsible for coverage
during its policy period
based on a time–on–
the–risk approach.
Minnesota Tony Eiden Co. v. State
Auto Prop. & Cas. Ins.
Co., 2009 Minn. App.
unpub. LEXIS 149 (Minn.
Ct. App. 2009)
Construction
defect
Contractor sought
coverage for claims
alleging faulty
workmanship causing
water damage.
All sums When continuous
injuries arise from
discrete event or series
of events, policy or
policies on risk at time of
risk or series of events
are liable for all sums
arising from event.
W. Bend Mut. & SVK
Dev., Inc. v. Valley Forge
Ins. Co., 651 F. Supp. 2d
983 (D. Minn. 2009)
Construction
defect
Developer sought
coverage for claims
asserted by
homeowners alleging
water infiltration,
stucco cracking, and
structural defects.
Pro rata Construction of a home
is not a discrete and
identifiable event and
damages are
appropriately
apportioned pro rata by
time-on-the-risk.
Wooddale Builders, Inc.
v. Maryland Cas. Co., 722
N.W. 2d 283 (Minn.
2006)
Construction
defect
Insured sought
coverage for various
construction defect
claims filed against it.
Pro rata Pro rata time-on-the-risk
allocation applies, and
the total period over
which liability is
allocated must include
time periods which the
insured was voluntarily
self-insured.
Missouri Doe Run Resources
Corp. v. Certain
Underwriters at Lloyd’s,
London, 400 S.W. 3d
463 (Mo. App. 2013)
Environ. PD Insured sought
coverage for long-tail
liabilities associated
with mining
operations.
All sums Court relied on
definition of ultimate net
loss in reversing trial
court’s pro rata decision.
Nationwide Ins. Co. v.
Cent. Mo. Elec. Co-op,
Inc., 278 F.3d 742 (8th
Cir. 2001)
Property
damage
Insured sought
coverage for damages
resulting from
producing electricity
with inconsistent
voltage.
Pro rata A time-on-the-risk
allocation is appropriate
since each insurer is
only liable for injuries
suered in its coverage
period.
Munich Re Construction Defect Resource Guide 67
Allocation of loss
State Citation Types of Case Facts Finding Comments
Missouri Monsanto Co. v. C.E.
Heath Comp. & Liab. Ins.
Co., 652 A.2d 30 (Del.
1994) (applying Mo. law)
Environ. BI & PD Insured sought
coverage for various
bodily injury and
property damage
claims arising out of
the release of
contaminants.
All sums Where multiple policies
are triggered, each
insurer whose coverage
is applicable must pay
“all sums” to the
policyholder and seek
contribution from the
other insurers.
Montana N.W. Corp. d/b/a N.W.
Energy v. Assoc. Electric
& Gas Ins. Serv. Ltd., No.
07-1174 (S.D. Cir. Ct.
2010), reprinted in 24
Mealey’s Ins. Litig. Rep.
No. 37 (Aug. 4, 2010)
Environ. PD Insured sought
coverage for property
damage arising from
contaminants
deposited at various
properties due to
floods.
All sums Triggered policies
require insurers to pay
any and all sums the
insured becomes legally
obligated to pay as a
result of an occurrence.
Nebraska Dutton-Lainson Co. v.
Cont’l Ins. Co., 778 N.W.
2d 433 (Neb. 2010)
Environ. PD Manufacturing
company used various
solvents in operations
to clean machines and
parts between 1948
and 1987 causing
contamination at four
dierent sites.
Pro rata Insured cannot assert
joint and several liability
without proving amount
of damages that
resulted during periods
of coverage provided by
each insurer.
New
Hampshire
EnergyNorth Natural
Gas, Inc. v. Certain
Underwriters at Lloyd’s,
934 A.2d 517 (N.H.
2007)
Environ. PD Insured sought
coverage for the
cleanup of pollution
at a former
manufactured gas
plant.
Pro rata The pro rata approach is
a superior allocation
method to joint and
several liability, and
courts should apply the
pro–rata by year and
limits method.
New Jersey Potomac Ins. Co. of Ill. v.
Pa. Mfr. Ass’n Ins. Co., 73
A.3d 465 (N.J. 2013)
Construction
defect
One insurer sued
another seeking
reimbursement of
costs incurred in
defending their
insured against
construction defect
claims.
Pro rata Insurer is entitled to
obtain contribution of
defense costs from
settling insurer under
the weighted time-on-
the-risk apportionment
doctrine enunciated in
Owens-Illinois Inc. v.
United Insurance Co.
Quincy Mut. Fire Ins. v.
Borough of Bellmawr,
799 A.2d 499 (N.J.
2002)
Environ. PD Insured sought
coverage for pollution
resulting from the
disposal of hazardous
waste into a landfill.
Pro rata Allocation of liability
between insurers for
pollution during their
policy periods should be
by days on the risk.
Carter-Wallace, Inc. v.
Admiral Ins. Co., 712
A.2d 1116 (N.J. 1998)
Environ. PD Insured sought
coverage for pollution
arising out of its
disposal of waste at a
landfill.
Pro rata Damages should be
allocated among years
based upon the amount
of risk assumed by the
insured and insurers in
each year and allocated
vertically among policies
in each year based upon
full policy limits.
68 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
New York Serio v. Public Serv. Mut.
Ins. Co., 759 N.Y.S. 2d 110
(N.Y. App. Div. 2003)
Environ. BI Insured sought
coverage for
bodily injury arising
out of exposure to
lead paint.
Pro rata Each insurer shall bear
pro rata responsibility
for funding the
settlement in direct
proportion to each
insurer’s time-on-the-
risk.
Consol. Edison Co. of
N.Y., Inc., v. Allstate Ins.
Co., 774 N.E. 2d 687 (N.Y.
2002)
Environ. PD Insured sought
coverage for
pollution arising
out of its operation
of manufactured
gas plants.
Pro rata Pro rata allocation is
consistent with the
language of the policies,
which provide
indemnification for
liability incurred as a
result of an accident or
occurrence during the
policy period.
Olin Corp. v. Ins. Co. of N.
Am., 221 F.3d 307 (2d
Cir. 2000)
Environ. PD Insured sought
coverage for soil
and groundwater
pollution resulting
from its operation
of a pesticide
manufacturing
facility.
Pro rata Pro rata allocation is
appropriate to prevent
insured from imposing
liability on an insurer for
injuries that occurred in
years when it did not
provide coverage, and a
full deductible is applied
to each year.
Stonewall Ins. Co. v.
Asbestos Claims Mgmt.
Corp., 73 F.3d 1178 (2d
Cir. 1995), modified, 85
F.3d 49 (1996)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
Pro rata Each triggered policy is
responsible only for a
pro rata share of the
total liability. Insured
must bear its pro rata
share of liability for
uninsured periods.
North
Carolina
Harleysville Mut. Ins. Co.
v. Hartford Cas. Ins. Co.,
1015 U.S. Dist. LEXIS
25362 (E.D.N.C. 2015)
Construction
defect
Contractor sought
coverage from several
insurers for defective
roofing liabilities.
Equal shares Drawing a distinction
with true pro rata
method, court opted for
equal shares (by insurer)
for indemnity and
defense.
Crossman Cmtys. of
N.C., Inc. v. Harleysville
Mut. Ins. Co., 769 S.E.2d
453 (N.C. Ct. App. 2015)
Construction
defect
Developer of
residential
communities sued
by homeowners for
various construction
defects.
Pro rata Court airmed ruling on
time–on–the–risk, pro
rata methodology over
some ten years.
Munich Re Construction Defect Resource Guide 69
Allocation of loss
State Citation Types of Case Facts Finding Comments
Ohio Goodyear Tire & Rubber
Co. v. Aetna Cas. & Sur.
Co., 769 N.E. 2d 835
(Ohio 2002)
Environ. PD Insured sought
coverage for the
cleanup of soil
contamination
resulting from its
waste disposal
practices.
All sums When continuous
pollution triggers claims
under multiple policies,
the insured can demand
coverage from a single
policy that covers “all
sums” incurred as
damages “during the
policy period,” subject to
that policy’s limit. The
insurer can obtain
contribution from other
applicable insurance
policies.
Lincoln Elec. Co. v. St.
Paul Fire & Marine Ins.
Co., 210 F.3d 672 (6th
Cir. 2000)
Asbestos BI Insured sought
coverage for
numerous asbestos
bodily injury claims.
Pro rata There is a rebuttable
presumption that all
exposure prior to
diagnosis contributed
equally to injury-in-fact.
Owens-Corning
Fiberglas Corp. v. Am.
Centennial Ins. Co., 660
N.E. 2d 770 (Ohio Com.
Pleas Ct. 1995)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums Each triggered policy is
obligated to pay in full,
subject to policy limits.
The right of excess
insurers to demand
proration between
themselves does not
aect the insured’s right
to full payment from the
insurer of its choice.
Oregon Ca. Ins. Co. v. Stimson
Lumber Co., 325 Fed.
Appx. 496 (9th Cir.
2009)
Property
damage
Insured sought
coverage for the cost
of defending warranty
claims involving
defective siding.
Pro rata When multiple insurers
have a defense
obligation, defense costs
can be apportioned
among solvent insurers.
Cascade Corp. v. Am.
Home Assurance Co.,
135 P.3d 450 (Ore. Ct.
App. 2006)
Environ. PD Insured sought
coverage for
groundwater pollution
resulting from its use
of chlorinated
solvents to clean
metal as part of its
manufacturing
process.
All sums Even though multiple
years and multiple other
policies are triggered,
any triggered policy is
liable for the full amount
of the insured’s claim,
subject to its policy
limit.
Emp‘rs Ins. of Wausau v.
Tektronix, No. CCV99-
08-032 (Or. Cir. Ct. May
5, 2003), reprinted in 17
Mealey’s Ins. Litig. Rep.
No. 30, Section A (June
10, 2003)
Environ. PD Insured sought
coverage for pollution
that occurred over an
extended period of
time.
Pro rata There is a clear
correlation between the
size of the plume and
the passage of time and
the cost of remediation,
so an allocation of
liability based on the
relationship between
time periods of coverage
and the total loss is
appropriate.
70 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Pennsylvania Am. Sterilizer Co. v.
Liberty Mut. Ins. Co., Civ.
No. 00-41E (W.D. Pa.
Aug. 5, 2002), reprinted
in 16 Mealey’s Ins. Litig.
Rep. No. 38, Section B
(Aug. 13, 2002)
Environ. BI Insured sought
coverage for bodily
injuries sustained as a
result of continuous
exposure to ethylene
oxide emitted from
the insured’s products
over a ten-year period.
All sums Where the injury is
continuous and
indivisible, each policy is
obligated to provide full
coverage up to its limits.
The insured can select
which policy will
respond. The court did
not preclude subsequent
reallocation among
insurers.
Koppers Co. v. Aetna
Cas. & Sur. Co., 98 F.3d
1440 (3d Cir. 1996)
Environ. PD Insured sought
coverage for
numerous
environmental claims.
All sums Environmental property
damage is a progressive
harm, and all triggered
policies are jointly and
severally liable subject
to reallocation based on
the “other insurance”
clause.
J.H. France Refractories
Co. v. Allstate Ins. Co.,
626 A.2d 502 (Pa. 1993)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums Each insurer on the risk
from first exposure to
manifestation is
responsible for full
defense and indemnity.
Insurer can then seek
contribution from other
triggered insurers.
Rhode Island Emhart Indust., Inc. v.
Century Indem. Co., 559
F.3d 57 (1st Cir. 2009)
a'd 769 S.E.2d (S.C.
2015)
Environ. PD Insured sought
defense costs
incurred in relation to
remediating a
superfund site.
All sums “All sums” and “ultimate
net loss” language of
policies do not admit to
any limitation, temporal
or otherwise.
OneBeacon Am. Ins. Co.
v. Narragansett Elec. Co.,
2010 Mass. Super.
LEXIS 233 (Mass. Super.
Ct. 2010) (predicting
Rhode Island law)
Environ. PD Insured sought
coverage for
environmental
contamination claims
at multiple sites.
All sums Finding no reason to
deviate from First
Circuit’s prediction in
Emhart Industries that
Rhode Island would
adopt an all sums
approach with respect
to allocation of defense
costs.
South
Carolina
Crossman Cmtys. of N.C.
v. Harleysville Mut. Ins.
Co., 717 S.E. 2d 589 (S.C.
2011)
Construction
defect
Developer sought
coverage for claims
that faulty
workmanship caused
water damage to
condominium units.
Pro rata Time–on–the–risk is
most consistent with
the language of a CGL
policy allocating
damages caused by
progressive injury.
Liberty Mut. Fire Ins. Co.
v. J.T. Walker Indus., 817
F. Supp .2d 784 (D.S.C.
2011)
Construction
defect
Window
manufacturer sought
coverage for five suits
filed by homeowners
for progressive
damages.
Pro rata Defense and indemnity
cost should be allocated
among triggered
policies based on time-
on-the-risk.
Munich Re Construction Defect Resource Guide 71
Allocation of loss
State Citation Types of Case Facts Finding Comments
Texas Mid-Continent Cas. Co.
v. Acad. Dev. Inc., 2010
U.S. Dist. LEXIS 87637
(S.D. Tex. 2010)
Construction
defect
Developer sought
coverage for cost of
defending claims
asserted by
homeowners for
diminution in value of
their homes.
All sums Policyholder is entitled
to select policy among
triggered policies that
will provide a complete
defense.
Highlands Ins. Co. v.
Temple- Inland, Inc., No.
98-42939 (Tex. Dist. Ct.
Aug. 4, 1999), reprinted
in 13 Mealey’s Ins. Litig.
Rep. No. 40, Section H
(Aug. 24, 1999)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums The policy does not
provide for the reduction
of the insurer’s policy
limits if an injury only
partially occurs during
the policy period. The
court did not preclude
subsequent reallocation
among insurers.
Union Pac. Res. Co. v.
Cont. Ins. Co., No. 249-
23-98 (Tex. Dist. Ct. Dec.
17, 1998), reprinted in 13
Mealey’s Ins. Litig. Rep.
No. 11, Section A (Jan. 19,
1999)
Environ. PD Insured sought
coverage for various
environmental claims.
All sums Once a policy is
triggered, it is liable to
the full extent of its limit
for all sums, with no
proration of liability. The
court did not preclude
subsequent reallocation
among insurers.
Virginia Morrow Corp. v.
Harleysville Mut. Ins.
Co., 101 F. Supp. 2d 422
(E.D. Va. 2000)
Environ. PD Insured sought
defense and
indemnity under its
policies for property
damage arising from
dry cleaning
operations and
deposits of
contaminants in soil.
Pro rata Based on a pollution
exclusion, court opined
that Virginia law
requires remediation
costs be allocated
equally over years
between
commencement of
contamination and
discovery.
C.E. Thurston & Sons
Inc. v. Chi. Ins. Co., No.
2:97CV1034 (E.D. Va.
1998), reprinted in 12
Mealey’s Ins. Litig. Rep.
No. 47 (Oct. 20, 1998)
Asbestos BI Insured sought
coverage for asbestos
bodily injury claims.
All sums Policies require insurer
to pay all sums insured
is obligated to pay
because of bodily injury
that occurs during policy
period. Utilizing a pro
rata allocation
contradicts policy
language.
Washington Mut. of Enumclaw Ins.
Co. v. One Beacon Ins.
Co., 2010 Wash. App.
LEXIS 2291 (Wash. Ct.
App. 2010)
Construction
defect
One insurer sued
another seeking
contribution for costs
paid to settle
construction defect
claims against jointly
insured contractor.
Pro rata Appropriate method of
apportioning damages
between multiple
insurers jointly and
severally liable is an
equitable determination
within sound discretion
of trial court.
72 Munich Re Construction Defect Resource Guide
Allocation of loss
State Citation Types of Case Facts Finding Comments
Washington Polygon Nw. Co., LLC v.
Steadfast Ins. Co., 682 F.
Supp. 2d 1231 (W.D.
Wash. 2009)
Construction
defect
Developer sought
coverage under
several consecutive
policies for
construction defect
claims.
Pro rata Reasonable basis exists
for allocating property
damage to common
elements across policy
periods based on unit
sales.
MacLean Townhomes,
LLC v. Charter Oak Fire
Ins. Co., 2008 U.S. Dist.
LEXIS 95192 (W.D.
Wash. 2008)
Construction
defect
Condominium
developer, as an
assignee of claims,
sought coverage for
water damages
caused by insured’s
faulty siding
installation.
All sums Once a policy is
triggered, insurer is
required to pay all sums
for which insured
becomes legally
obligated, up to policy
limits.
Gruol Constr. Co., Inc. v.
Ins. Co. of N. Am., 524
P.2d 427 (Wash. Ct. App.
1974)
Construction
defect
Builder sued to
recover cost of
defending claims for
damages caused by
dry rot which resulted
from improper
backfilling.
All sums When an insured
sustains damages of a
continuing nature, its
insurers are jointly and
severally liable.
West Virginia Wheeling Pittsburgh
Corp. v. Am. Ins. Co.,
2003 WL 23652106 (W.
Va. Cir. Ct. 2003)
Environ. PD Insured sought
coverage for pollution
damage at four sites.
All sums Once a policy is
triggered, the insured
may select which insurer
shall respond and collect
full indemnity. The
insurer can seek
contribution from other
policies or the insured
for those periods of self-
insurance.
Munich Re Construction Defect Resource Guide 73
Anti-indemnification statutes, right
to repair/cure statutes, statutes of
limitations, and statutes of repose
Legislation impacting construction defect claims has been enacted in many states,
including anti-indemnification statutes, right to repair/cure, statutes of limitations,
and statutes of repose.
Anti-indemnification statutes
Transfer of risk by contract, via indemnity or hold-harmless agreements, is a common
practice in the construction industry. In response to such contractual arrangements,
many states have case law or statutory regulations that set up anti-indemnity rules for
construction projects, to strictly regulate and in some cases prohibit contractual risk
transfer. This is especially true regarding claims for an indemnitee’s own negligence.
Right to repair/cure
Several states have passed legislation to protect the construction trade and oer
an alternative to costly litigation. Key provisions of these statutes include: requiring
written notice regarding alleged defects from homeowners to builder prior to proceeding
with filing a suit; allowing the builder to inspect the premises; providing for a response
to the homeowner’s claim, including an oer to repair, pay a monetary compromise,
or decline the claim; limitations for the “reasonable” cost of repairs and possible
reimbursement of legal fees; and a requirement that the right-to-repair provisions are
stated in the sales contract.
Statute of limitations
Statutes of limitations provide a specific time within which a claim must be brought.
Such statutes typically begin to run from the time injury or property damage is or could
be “discovered.”
Statute of repose
A statute of repose acts as a bar on any claims, and usually starts on a date certain, such
as the close of escrow, transfer of title, or occupancy. Where the periods of time dier, the
statute of limitations may be tolled or extended for reasons set forth in the statute. Most
states have many, often overlapping, statutes of limitations.
The following is a summary by state of anti-indemnification statutes, right to repair/cure
statues, statutes of limitations and statutes of repose.
74 Munich Re Construction Defect Resource Guide
Anti-indemnification statutes, right to repair/cure statutes, statutes of limitations,
and atatutes of repose
State Anti-Indemnification
Statutes
Right to Repair/Cure Statute of Limitations Statute of Repose
Alabama None. See, City of
Montgomery v. JYD Int'l,
Inc., 534 So.2d 592 (Ala.
1988); Cochrane Roofing &
Metal Co. v. Callahan, 472
So. 2d 1005 (Ala. 1985);
None Ala. Code §§ 6-2-34,
6-2-38 (2014)
Ala. Code §§ 6-5-218,
6-5-221, 6-5-225,
6-5-227(2014)
Alaska Alaska Stat. § 45.45.900
(2014)
Alaska Stat. § 09.45.881
to 09.45.899 (2014)
Alaska Stat. §§ 09.10.054,
09.10.070 (2014)
Alaska Stat. §
09.10.055 (2014)
Arizona Ariz. Rev. State. Ann. §§
34-226, 25-86 (2014)
Ariz. Rev. Stat. Ann. §
12-1361 to 12-1366 (2014)
Ariz. Rev. Stat. Ann. §
12-542, 12-550 (2014)
Ariz. Rev. Stat. Ann. §
12-552 (2014)
Arkansas Ark. Code Ann. § 4-56-
2014 (2014)
None Ark. Code Ann. § 16-56-
105 (2014)
Ark. Code Ann. § 16-56-
112 (2014)
California Cal. Civ. Code §§ 2782,
2782.8 (2014)
Cal. Civ. Code § 895 to
945.5 (2014)
Cal. Civ. Proc. Code §§
312, 337 (2014)
Cal. Civ. Proc. Code §§
337.1, 337.15 (2014)
Colorado Colo. Rev. Stat. § 13-50-5-
102 (2014)
Colo. Rev. Stat. § 13-20-
802 to 13-20-807 (2014)
Colo. Rev. Stat. §§ 13-80-
102, 13-80-107(1)(b),
13-20-803.5, 13-20-805
(2014)
Colo. Rev. Stat. § 13-80-
104 (2014)
Connecticut Conn. Gen. Stat. §
52-572k (2014)
None Conn. Gen. Stat. §§
52-584, 52-577, 52-577a
(2014)
Conn. Gen. Stat. §
52-584(a) (2014)
Delaware Del. Code. Ann. tit. 6 §
2704 (2014)
Del. Code. Ann. tit. 25 §
81-321 (2014)
Del. Code. Ann. tit. 10 §
8106 (2014)
Del. Code. Ann. tit. 10 §
8127 (2014)
District of
Columbia
None. See, N.P.P. Contr. v.
John Canning & Co., 715
A.2d 139 (D.C. 1988)
None D.C. Code Ann. § 12-301
(2014)
D.C. Code Ann. § 12-310
(2014)
Florida Fla. Stat. § 725.06 (2014) Fla. Stat. § 558.001
to 558.005 (2014)
Fla. Stat. § 95.031 (2014) Fla. Stat. § 95.11 (2014)
Georgia Ga. Code Ann. § 13-8-2(b)
(2014)
Ga. Code Ann. § 8-2-35
to 8-2-41 (2042)
Ga. Code Ann. §§ 9-3-30,
51-1-11 (2014)
Ga. Code Ann. § 9-3-51
(2014)
Hawaii Haw. Rev. Stat. § 431:10-
222 (2014)
Haw. Rev. Stat. § 672E-1 to
672E-13 (2014)
Haw. Rev. Stat. § 657-7
(2014)
Haw. Rev. Stat. § 657-8
(2014)
Idaho Idaho Code Ann. § 29-114
(2014)
Idaho Code Ann. § 6-2501
to 62504 (2014)
Idaho Code Ann. §
5-241(2015)
Idaho Code Ann. §
5-241 (2014)
Illinois 740 Ill. Comp. Stat. Ann.
35/1 (2014)
None 735 Ill. Comp. Stat. Ann.
§§ 5/13-205, 5/13-213
(2014)
735 Ill. Comp. Stat.
Ann. 5/13-214 (2014)
Indiana Ind. Code § 26-2-5-1
(2014)
Ind. Code § 32-27-3-1
to 32-27-3-14 (2014)
Ind. Code §§ 34-11-1-2,
34-11-2-4 , 34-11-2-7,
34-20-3-1 (2014)
Ind. Code §§ 32-30-1-5,
32-30-1-6 (2014)
Iowa Iowa Code § 537A.5
(2013)
None Iowa Code § 614.1 (2013) Iowa Code § 614.1
(2013)
Kansas Kan. Stat. Ann. § 16-121
(2013)
Kan. Stat. Ann. § 60-4701
to 60-4710 (2013)
Kan. Stat. Ann. § 60-510
to 60-513 (2011)
Kan. Stat. Ann. §
60-3303(a)(1) (2013)
Munich Re Construction Defect Resource Guide 75
Anti-indemnification statutes, right to repair/cure statutes, statutes of limitations,
and atatutes of repose
State Anti-Indemnification
Statutes
Right to Repair/Cure Statute of Limitations Statute of Repose
Kentucky Ky. Rev. Stat. Ann. §
371.180 (2014)
Ky. Rev. Stat. Ann. §
411.250 to 411.266 (2014)
Ky. Rev. Stat. Ann. §§
411.250 to 411.264, 411.310
(2013)
Ky. Rev. Stat. Ann. §
413.135 (2014)
Louisiana La. Rev. Stat. Ann. §
38:2216(G) (2013)
La. Rev. Stat. Ann. § 9:3141
to 9:31350 (2014)
La. Civ. Code. Ann. art.
3499 to 3500 (2013)
La. Rev. Stat. Ann. §§
9:2772, 9:5607 (2013)
Maine None. See, State Farm
Mut. Ins. Co. v. Koshy, 995
A.2d 651 (Me. 2010)
None Me. Rev. Stat. Ann. tit. 14,
§ 752-A (2014)
Me. Rev. Stat. Ann. tit.
14, § 752-A (2014)
Maryland Md. Code. Ann., Cts. & Jud.
Proc. § 5-401 (2014)
None Md. Code. Ann., Cts. & Jud.
Proc. § 5-108 (2014)
Md. Code. Ann., Cts. &
Jud. Proc. § 5-108
(2014)
Massachusetts Mass. Gen. Laws ch. 149, §
29C (2014)
None Mass. Gen. Laws ch. 260,
§ 2B (2014)
Mass. Gen. Laws ch.
260, § 2B (2014)
Michigan Mich. Comp. Law §
691.991 (2014)
None Mich. Comp. Law §
600.5839 (2014)
Mich. Comp. Law §§
339.2411, et seq. (2014)
Minnesota Minn. Stat. § 337.01 to
337.02 (2014)
Minn. Stat. § 327A.01
to 327A.08 (2014)
Minn. Stat. § 541.051
(2013)
Minn. Stat. § 541.051
(2014)
Mississippi Miss. Code. Ann. § 31-5-41
(2014)
Miss. Code. Ann. § 83-58-1
to 83-58-17 (2014)
Miss. Code Ann. § 15-1-41
(2014)
Miss. Code Ann. §
15-1-41 (2014)
Missouri Mo. Rev. Stat. § 434.100
(2014)
Mo. Rev. Stat. § 436.350
to 436.365 (2014)
Mo. Rev. Stat. § 516.120
(2014)
Mo. Rev. Stat. § 516.097
(2013)
Montana Mont. Code Ann. §§ 18-2-
124, 28-2-2111 (2013)
Mont. Code Ann. § 70-19-
426 to 70-19-428 (2014)
Mont. Code. Ann. §§ 27-2-
102, 27-2-202, 27-2-7-204,
27-2-207 (2013)
Mont. Code. Ann. §
27-2-208 (2013)
Nebraska Neb. Rev. Stat. § 25-21,187
(2013)
None Neb. Rev. Stat. §§ 25-201,
25-205, 25-212, 25-224
(2014)
Neb. Rev. Stat. §
25-223 (2013)
Nevada Nev. Rev. Stat. § 616B.609
(2014)
Nev. Rev. Stat. § 40.600 to
49.695 (2014)
Nev. Rev. Stat. §§ 11.010,
11.190 (2014)
Nev. Rev. Stat. § 11.203
to 11.205 (2014)
New Hampshire N.H. Rev. Stat. Ann. §
338-A:1 (2014)
N.H. Rev. Stat. Ann. §
359-G:1 to 359-G:8 (2014)
N.H. Rev. Stat. Ann. §
507-D:2, 508:4 (2014)
N.H. Rev. Stat. Ann. §
508:4-b (2014)
New Jersey N.J. Stat. Ann. § 2A:40A-1
to 2A:40A-2 (2014)
None N.J. Stat. Ann. § 2A:14-1
(2014)
N.J. Stat. Ann. § 2A:14-
1.1 (2014)
New Mexico N.M. Stat. Ann. § 56-7-1
(2013)
None N.M. Stat. Ann. §§ 37-1-1,
37-1-3, 37-1-4 (2013)
N.M. Stat. Ann. §
37-1-27 (2013)
New York N.Y. Gen. Oblig. Law §§
5-322.1, 5-324 (McKinney
2014)
None N.Y. C.P.L.R. 213, 214,
214-d (McKinney 2014)
None
North
Carolina
N.C. Gen. Stat. § 22B-1
(2013)
None N.C. Gen. Stat. §§ 1-15,
1-52, 1-53 (2013)
N.C. Gen. Stat. § 1-50
(2013)
North Dakota N.D. Cent. Code § 9-08-
02.1 (2014)
N.D. Cent. Code §
43-07-26 (2014)
N.D. Cent. Code §§ 28-01-
16, 28-01.3-08 (2014)
N.D. Cent. Code §§
28-01-44, 28-01.3-08
(2014)
76 Munich Re Construction Defect Resource Guide
Anti-indemnification statutes, right to repair/cure statutes, statutes of limitations,
and atatutes of repose
State Anti-Indemnification
Statutes
Right to Repair/Cure Statute of Limitations Statute of Repose
Ohio Ohio Rev. Code Ann. §
2305.31 (2014)
Ohio Rev. Code Ann. §
1312.01 to 1312.08 (2014)
Ohio Rev. Code Ann. §§
2305.06, 2305.07,
2305.09, 2305.10 (2014)
Ohio Rev. Code Ann.
§2305-131 (LexisNexis
2014)
Oklahoma Okla. Stat. Ann. tit. 15, §
422 to 424 (2014)
Okla. Stat. Ann. tit. 15, §
765.5 to 765.6 (2014)
Okla. Stat. Ann. tit. 12, §
95 (2014)
Okla. Stat. Ann. tit. 12,
§ 109 (2014)
Oregon Or. Rev. Stat. § 30.140
(2013)
Or. Rev. Stat. § 701.560
to 701.595 (2013)
Or. Rev. Stat. §§ 12.080,
12.110, 12.115, 30.905
(2013)
Or. Rev. Stat. § 12.135
(2013)
Pennsylvania 68 Pa. Stat. Ann. § 491
(West 2014)
None 42 Pa. Cons. Stat. Ann. §
5524, 5525 (West 2014)
42 Pa. Cons. Stat. Ann.
§ 5536 (2014)
Rhode Island R.I. Gen. Laws § 6-34-1
(2013)
None R.I. Gen. Laws § 9-1-13
to 9-1-14 (2013)
R.I. Gen. Laws § 9-1-29
(2013)
South
Carolina
S.C. Code Ann. § 32-2-10
(2013)
S.C. Code Ann. §§ 40-59-
810 to 40-59-860, 40-11-
500 to 40-11-570 (2013)
S.C. Code Ann. §§ 15-3-
20, 15-3-530 (2013)
S.C. Code Ann. § 15-3-
640 (2013)
South Dakota S.D. Codified Laws §§
56-3-16, 56-3-18 (2014)
S.D. Codified Laws §
21-1-15 to 21-1-16 (2014)
S.D. Codified Laws §
15-2-13 to 15-2-14 (2014)
S.D. Codified Laws §§
15-2A-3, 15-2A-7 (2014)
Tennessee Tenn. Code Ann. § 62-6-
123 (2014)
Tenn. Code Ann. § 66-36-
101 to 66-36-103 (2014)
Tenn. Code Ann. §§ 28-3-
103, 28-3-104, 28-3-109
(2014)
Tenn. Code Ann. §
28-3-202 (2014)
Texas Tex. Ins. Code Ann. §
151.101 to 151.105 (2014);
Tex. Civ. Prac. & Rem.
Code Ann. § 130.001 to
130.005 (2014)
Tex. Prop. Code Ann. §
27.001 to 27.007 (West
2014)
Tex. Civ. Prac. & Rem. §§
16.003, 16.012, 16.051,
(2014)
Tex. Civ. Prac. & Rem.
§§ 16.008, 16.009
(West 2014)
Utah Utah Code Ann. § 13-8-1
(2014)
None Utah Code Ann. §§ 78B-2-
102, 78B-2-307, 78B-2-
309, 78B-2-225 (2014)
Utah Code Ann. §
78B-2-225 (2014)
Vermont None. See, Tateosian v.
State, 945 A.2d 833 (Vt.
2007)
None Vt. Stat. Ann. tit. 12, § 465,
511, 512 (2014)
None
Virginia Va. Code Ann. §§ 11-4.1,
11-4.4 (2014)
Va. Code Ann. § 55-70.1
(2014)
Va. Code Ann. §§ 8.01-243,
8.01-246 (2014)
Va. Code Ann. § 8.01-
250 (2014)
Washington Wash. Rev. Code §
4.24.115 (2013)
Wash. Rev. Code §
64.50.010 to 64.50.060
(2014)
Wash. Rev. Code §§
4.16.050, 4.16.040,
4.16.080, 7.72.060 (2014)
Wash. Rev. Code §§
4.16.300, 4.16.310
(2014)
West Virginia W. Va. Code § 55-8-14
(2014)
W. Va. Code § 21-11A-1
to 21-11A-17 (2014)
W. Va. Code §§ 55-2-6,
55-2-12 (2014)
W. Va. Code § 55-2-6a
(2014)
Wisconsin Wis. Stat. § 895.447
(2014)
Wis. Stat. §§ 101.148, 895.
07 (2014)
Wis. Stat. §§ 893.43,
893.52, 893.53 (2014)
Wis. Stat. § 893.89
(2014)
Wyoming None. See, Northwinds of
Wyo., Inc. v. Phillips
Petroleum Co., 779 P.2d
753 (Wyo. 1989)
None Wyo. Stat. Ann. § 1-3-105
(2014)
Wyo. Stat. Ann. §
1-3-111 (2014)
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