Coverage Triggers For Construction Defect Claims

This is the first in a series of articles dealing with construction defect claim fundamentals. In it, we address the trigger of coverage in construction defect claims.

The stage will then be set for the second article covering principles of allocation of damages to specific policies and, in some cases, to the insured.

For the purpose of this article, we are going to assume that the construction-defect-caused damage is a covered occurrence and qualifies as property damage as defined in the Insurance Services Office, Inc. (ISO), commercial general liability (CGL) policy.

Let’s start with a couple of working definitions. Construction defect is a failure of the construction to perform in an intended or expected way. This failure to perform can, but not necessarily, cause physical injury to the work itself and/or other property or work.

Construction defects include defects in design, faulty work, defective building products/material, and various types of soil failure and can be characterized as a breach of a contractual obligation or a breach of a duty outside of a contract. They can be discovered as early as during construction or can go undetected for many years until symptoms appear.