Ohio Supreme Court Determines Defective Construction is Not Covered by CGL Policy

November 7, 2012 – The most recent article for “Burke’s Law,” featured on www.claimsjournal.com, analyzed the Ohio Supreme Court’s decision in Westfield Insurance Company v. Custom Agri Systems, Inc., 2012 Ohio 4712.  In the case, the court determined that defective construction was not an “occurrence” under a commercial general liability insurance policy, settling an issue on which the state’s appellate courts had been split.

While courts generally agree that collateral property damage stemming from defective construction is covered by a CGL policy, they are split on whether defective construction itself constitutes property damage caused by an occurrence.  In the case, the insurer argued that faulty workmanship was not an occurrence and that even if  it was, the policy’s exclusions barred coverage.  Because of the split among Ohio’s courts on the issue, the question was ultimately presented to the Ohio Supreme Court.  The Supreme Court found that defective construction is not the kind of fortuitous event that constitutes an occurrence and therefore there could be no coverage.  One dissenting justice, however, thought the majority’s ruling was too broad and instead thought that defective workmanship could constitute an occurrence and that the claim was more appropriately analyzed under the policy’s exclusions.  The case is a significant clarification of the law in Ohio.

The entire article can be read at https://www.claimsjournal.com/columns/burkes-law/2012/11/07/216951.htm.

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