Alabama Supreme Court Clarifies Position on Construction Coverage Question

By Frederic J. Giordano and Robert F. Pawlowski, K&L Gates, Newark

Damage to Contractor’s Work Resulting from Faulty Workmanship Does Constitute "Property Damage" Caused by an "Occurrence" under Standard CGL Policy

In an important decision for policyholders in the construction business, the Supreme Court of Alabama recently clarified that Alabama law is in accord with the growing majority of jurisdictions finding coverage for property damage arising out of defective workmanship. Adding precision to its prior holdings and citing with approval various out-of-state authority, the Alabama high court confirmed that the definition of “occurrence” does not exclude property damage caused by faulty workmanship and that damage to other parts of a structure caused by defective workmanship constitutes “‘property damage’ ‘caused by’ or ‘arising out of’ an ‘occurrence.’” Owners Insurance Company v. Jim Carr Homebuilder, LLC, —So.3d—, 2014 WL 1270629 *6 (Ala. March 28, 2014).

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