George B. Hall, Jr. | Phelps Dunbar LLP | December 30, 2015
A federal court in Florida held that a CGL policy provided coverage for the complete replacement of subcontractors’ defective work causing ongoing damage to non-defective property. Pavarani Construction Co. v. Ace Am. Ins. Co., 2015 WL 6555434 (S.D. Fla. Oct. 29, 2015).
The insured, a general contractor for a condominium project, filed a declaratory judgment action seeking an adjudication of the rights, duties, and obligations under its liability policy relative to a claim of defective work performed by two of the subcontractors that caused ongoing damage to non-defective property. The insured sought coverage for the replacement of both the defective work and the ensuing damage to the non-defective property. The insurer argued that the repairs were not covered by the policy because they remedied the subcontractors’ defective work, which was excluded under the subject policy.
The district court granted the insured’s motion for summary judgment, finding that in order to repair the covered ongoing damage to the non-defective property it was necessary also to repair the subcontractors’ defective work. The district court found the policy provided coverage for repairs to both the defective and non-defective work.