Three strikes on defective work insurance claim
Source: http://www.lexology.com, July 22, 2014
By: Stanley A. Martin, Duane Morris LLP
A federal appeals court recently retired, in short order, a contractor’s insurance claim arising from defective work. The claim arose when scratches were noted on a glass storefront, shortly after installation by one sub but also after preliminary cleaning by another sub, and two days before the store was open to the public. No cause for the scratches was identified, at least in the decision.
Strike One. The damage arose from work performed by one of the subs, thus coming within an exclusion on the contractor’s GL policy. There was no evidence of any accident.
Strike Two. The claim was for restoration or replacement of the glass – the very item claimed to be either defective or improperly cleaned – and not damage to other work.
Strike Three. As the problem was noted before the store opened to the public, the claim did not fall under the completed operations hazard, since the glass had yet to be put to its intended use.
A simple, brief, lesson. The case is Allegheny Design Mgmt. v. Travelers Indemnity Co. of America, 2014 U.S. App. LEXIS 13190 (3rd Cir., July 11, 2014).
