Construction Defect Claims Are Covered Under CGL Policies - But Watch Out For The Loopholes

Western Real Estate News

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PUBLISHED ON: December 17, 2010

General contractors frequently buy commercial general liability (or “CGL”) insurance on the assumption that it will cover third-party property damage claims in connection with
defective construction. This assumption is often encouraged by the insurance companies themselves.

Unfortunately, when general contractors seek coverage in connection with construction defect claims, they quickly learn that their insurance company has a number of tried and
true roadblocks in store for them. Some of these obstacles are found within the CGL policy itself, which is riddled with numerous and complex limitations and exclusions. Others
have been erected by the courts, which have been successfully persuaded by insurance companies to give the standard-form CGL policy a narrower meaning than its express language would otherwise suggest.